The Association Financial Advisers (AFA) has lashed the findings of the Parliamentary Joint Committee inquiry into the life insurance industry as a “rehash” which fell well short of its objective.
In a letter to member issued yesterday, the AFA said that, in its view, the “report fundamentally fails to address” a key objective in its terms of reference - “Assessment of relative benefits and risks to consumers of the different elements of the life insurance market, being direct insurance, group insurance and retail advised insurance”.
“Instead, it merely rehashes reports and research in relation to retail advised insurance and advice that have previously been comprehensively addressed by the government through [Future of Financial Advice] FoFA, the Life Insurance Framework (LIF) and more recently Professional Standards Legislation,” the AFA letter to members said.
“The report demonstrates no real attempt to investigate and indeed communicate, the relative merits of Direct, Group and Retail Markets, yet seems to take aim at the Retail Advised sector based on previous reports available,” it said.
The AFA claimed that, on this basis, “the report fundamentally fails to adequately compare the cost of insurance, quality of benefits, claims payment ratios, product features or underwriting issues across the three channels. Not to mention the value of advice.”
The AFA said it would be making its position clear to politicians and noted that the recommendations contained in the PJC report were only that – recommendations which would be considered by the minister.
In doing so, it concluded on the note that: “This scrutiny and increasing cost to provide advice is threatening the very existence of an Advice Profession and the ability for small business advice practices to continue to provide cost effective tailored financial advice.
“If the costs and burden to all is prohibitive as a result of a few, the Australian public will be deprived of a profession that provides an immeasurable benefit to people and the community in which they live.”