A Financial Services Council (FSC) submission to the Life Insurance and Advice Working Group (Trowbridge Committee) suggesting a flat 20 per cent commission and five-year responsibility period has caused consternation amongst life/risk advisers.
The FSC submission, although still to be formally released, is being widely discussed in the life/risk advice space with concerns being expressed to Money Management about the manner in which such a regime would impact business viability.
The importance of the FSC submission is reflected in the fact that the Life Insurance and Advice Working Group was established by both the FSC and the Association of Financial Advisers (AFA) in the immediate aftermath of the highly critical Australian Securities and Investments Commission (ASIC) released a Review of Retail Life Insurance Advice in October 2014.
The working group is being headed by former Australian Prudential Regulation Authority (APRA) member, John Trowbridge and has received hundreds of submissions following the release of its interim report in December.
While the FSC represents all of the major insurance providers, Money Management has been told that not all of the insurers have indicated their support for the position expressed in the FSC submission, with some newer entrants currently pursuing growth indicating a different approach.
The FSC submission is causing particular concern because, if adopted, it would impact the book value of advisers' life/risk businesses and significantly impact cash-flows.
The Trowbridge working group is expected to hand down its final report before the end of March.
