Advisers have become competitors to group and direct insurance, which might explain why the Financial Services Council (FSC) went behind the backs of industry groups and the Government to arrange a carve out for direct.
Such was the suggestion from risk adviser group, the Life Insurance Customer Group (LICG), which has once again attacked the FSC for its role in creating the Life Insurance Framework (LIF).
It also suggested the FSC did not want unaligned advisers reviewing insurance offerings in the retail market as well as other distribution channels.
“When you consider that insurers are no longer dependent on advisers to get their product to market, the connection between fewer advisers and direct becomes obvious,” the group said.
“If you don’t want consumers to know the facts about all the insurance alternatives, it is easy to see why some advisers may be perceived as ‘getting in the way’. That’s why industry super funds might think advisers are getting in their way too.”
The group also accused the FSC of misusing market power to eliminate competition, adding that the direct carve-out was not an accident. It also noted Assistant Treasurer, Kelly O’Dwyer, had reported on the agreed LIF reforms by all industry bodies, and it included all channels of retail distribution, personal advice, general advice, and direct.
“Yet, in submissions to the Senate enquiry into the LIF Bill, both the FSC and ASIC [Australian Securities and Investments Commission] expressly noted that direct was excluded from the ‘reforms’. This was tucked away inside government submissions, perhaps no-one was supposed to notice,” the LICG said.
The group also noted the FSC had not responded publically to a media release by the Association of Financial Advisers (AFA) on the direct carve-out.
Furthermore, the group asked for comment from Treasury since O’Dwyer’s media and Parliamentary reporting on LIF was based industry agreement and the independent Trowbridge process.
