The Federal Election outcome illustrates that engaging in short-termism through policies like the Life Insurance Framework (LIF) is detrimental, a group of risk advisers believe.
The Life Insurance Consumer Group (LICG) welcomed news that a government had been formed, which meant there could be progress on LIF reform.
It reiterated its attack against the Financial Services Council (FSC), however, for proposing LIF reforms, arguing that it would benefit FSC members to the detriment of small business advisers.
“According to many years of media reports, FSC members have been responsible for major failings in the financial services industry. They have not been held to account by the FSC Board or Government, despite many enquiries,” the group said.
“LIGC members hope that the imminent “Scrutiny of Financial Advice” (SOFA) enquiry will be effective.”
The LICG called for the government to review the entire life insurance industry through SOFA before introducing the revised LIF.
“From the actions of the FSC, the idea is that all Australians should rely on insurance in super funds, get bank ‘advice’, or go on-line to buy, or replace their policies with ‘cheaper’ ones as encouraged by media,” the group said.
It emphasised the need for independent advice that reviewed all available options in insurance distribution channels.
“Significant evidence shows systemic issues for consumers are insurer based, not adviser,” the group said.
“Without advice, unsuspecting purchasers don’t know what they are not getting from these distribution channels. Those unadvised options are more profitable for insurers.”
The group said the LIF legislation should be evidence-based, consumer-centric, long-term policy that took all life insurance participants into account and was transparent.
