The life industry should develop a sustainable commission model capable of resolving the Government’s concerns around conflict of interest, according to the chief executive of Tower Australia Limited, Jim Minto (pictured).
Commenting on the Government’s release of the Future of Financial Advice reforms, Minto said the life risk industry could continue to push back or it could develop changes “that make the model viable for the longer term and attempt to win Government confidence in these”.
However, Minto said that any rules developed by the industry should be applied both inside and outside of superannuation – something that would remove concern about unequal treatment and help ensure that underinsurance is not exacerbated.
Notwithstanding his calls for a proactive industry approach, Minto pointed to independent research that had shown that policy lapse rate had been rising both inside and outside of superannuation.
“An independent report shows profit reductions across the industry of $100 million a year,” he said. “This has created some sustainability concerns around this model for the industry and in time potential cost increase for consumers.”
