The future of the Life Insurance Framework (LIF) is bigger than just the question around commissions and comes down to an issue of consumer choice.
That was the bottom line of a Financial Services Council (FSC) webinar panel discussion in which both the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) acknowledged that the whole question of the future of the LIF has become more complex since the regime was first put in place.
What is more, AFA chief executive, Phil Kewin said that the Australian Securities and Investments Commission should take that added complexity into account as part of the review of the LIF regime scheduled for next year.
He said that any review of the LIF would require a review of lapse rates and premium levels but the question had now become whether it was wider than the issues which had formed the original core of the argument.
Kewin acknowledged that the AFA had been working with the FPA to determine “what success looked like” in terms of the LIF, with FPA chief executive, Dante De Gori saying that the jury was still out on whether the framework had been successful.
“The question has been asked in this forum about whether commissions should stay but for me we have to look at it the opposite way – it is about choice for consumers and it is about choice for advisers and how they want to structure their business,” De Gori said.
“If there were to be drastic changes to the LIF going forward then what you would be really doing is removing choice,” he said.
