AFA urges pre-emption of Trowbridge
The Association of Financial Advisers (AFA) is encouraging licensees to take a self-directed approach to addressing the concerns raised in the Australian Securities and Investments Commission report into retail life insurance including adopting new remuneration standards and quality controls.
AFA chief executive, Brad Fox, signalled his organisation's approach with a statement that "the time is right for self-directed responses from the advice industry".
"In recent months we have seen excellent examples of licensees stepping up to take leadership positions on issues like adviser education standards and professional association membership," he said. "In light of the ongoing industry negotiations to reach a unified position for the future of life insurance, there is a clear opportunity for licensees to implement their own solutions, particularly in relation to replacement insurance advice and adviser remuneration."
Fox claimed that many advisers had already begun the move away from high upfront commissions — "those paying over 100 per cent of the premium in year one" - to sustainable hybrid models in response to training programs offered by either their licensee or insurers and to meet the expectations of their clients.
"I would not be surprised at all if we see announcements from licensees mandating new standards ahead of an industry wide solution being agreed," Fox said. "I think it is totally conceivable that some licensees will seize on the opportunity to address consumer perceptions by mandating that their advisers accept no more than a hybrid payment. This would certainly have the AFA's support."
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