The Association of Financial Advisers (AFA) is claiming a victory from the Federal Government’s most recent announcement of adjustments to the regulations intended to underpin the Life Insurance framework, particularly shutting off the carve-out of direct sales.
Those adjustments, announced by the Minister for Revenue and Financial Services, Kelly O’Dwyer, address a number of concerns raised by the AFA and other adviser groups amid the consultation process which has been continuing around the LIF implementation.
AFA chief executive, Brad Fox made specific reference to a majority vote within his organisation which had allowed it to pursue the changes.
Key amongst adjustments is an expansion of the legislation to nil advice sales — something which the AFA claims will ensure no loop-hole exist, including no carve out for direct sales.
As well, there is the single implementation date of 1 January, 2018, which will apply to all advisers irrespective of their employment status and the consequent key dates for when the maximum hybrid remuneration and ongoing commissions will lift to 20 per cent.
– 80 per cent from 1 January 2018
– 70 per cent from 1 January 2019
– 60 per cent from 1 January 2020
The AFA has also highlighted that, in league with the Financial Planning Association (FPA), it had secured a reduction in the three-year clawback to two years and a for the clawback not to apply in a range of situations.
Announcing the changes, O’Dwyer said the revised regulations followed ongoing consultation with stakeholders to “establish a level playing field by applying the new requirements equally to all advisers regardless of employment arrangements”.
She said that, in addition, the revised regulations enabled the reforms to be applied to both advised and direct sales of life risk insurance products.
“This maintains the integrity of the reforms by ensuring they apply equally regardless of distribution channel,” the minister said.
O’Dwyer said other changes had also been made to simplify the regulations and reflect the revised reform commencement date of 1 January 2018, including the removal of transition arrangements that allowed commissions to be paid on stamp duty for one year only.
