The Association of Financial Advisers (AFA) has sought to scotch suggestions that the Life Insurance Framework (LIF) in any way sanctions insurers moving to cap level commissions.
Responding, in part, to criticism of the way the AFA and the Financial Planning Association (FPA) handled the post-Trowbridge negotiations, AFA chief executive, Brad Fox, said any move by insurers, through the Financial Services Council (FSC), to collectively cap level commissions would represent profiteering.
He said the LIF had always included a very clear statement protecting the existing level commission regime.
“The LIF agreement between the AFA, the FSC, and the FPA was released on 25 June 2015 by the Assistant Treasurer, Josh Frydenberg,” he said.
“It was headed by a clear statement, ‘This proposal is not intended to limit the industry’s current ability to operate on a level commission or fee-for-service basis’.”
Fox said the Financial System Inquiry recommendation on level commissions did not seek to set the rate, suggesting that it should be left to the marketplace to set.
“Any move to reduce the rate of level commission payments has nothing to do with the quality of financial advice,” he said.
“The AFA will strongly resist any concerted actions by the life insurers to collectively set a cap on the rate of level commissions.”
“Any move by insurers, through the FSC, to collectively cap level commissions is profiteering at the expense of advisers and their practices. It would not be acceptable. It is outside of the agreement.”
