The Association of Financial Advisers (AFA) is looking to close the loophole that allows a carve-out for direct insurance sales that excludes it from the Life Insurance Framework (LIF), and has refuted the Financial Services Council’s (FSC’s) continued calls to seek a carve-out.
In a letter to members this week, AFA president, Deborah Kent, said that disappointingly, the FSC was continuing to campaign for a carve-out despite the Minister agreeing that there would be no carve-out for direct sales channels in November 2015.
In its feedback on the Exposure Draft Legislation and Explanatory Memorandum for the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2015, the FSC stated in its submission to the Treasury in December 2015 that more consultation was required to avoid unintended outcomes on direct life insurance distribution models.
“We see this behaviour from the FSC as unacceptable given the thoroughness of the negotiations and that the Minister had already publicly confirmed that LIF would apply to direct insurance,” Kent said in the letter.
She said the AFA Board wanted to see this loophole closed before legislation and regulation was put into effect by the next government.
Kent reiterated the point made by others before her and warned advisers that none of the major parties had indicated that the LIF outcome would favour them more than the current form of LIF.
“Depending on which party forms power after the election, LIF may continue substantially in its current form, or it may not,” she said.
