The Association of Financial Advisers (AFA) has endorsed the life insurance remuneration arrangement bill introduced by the Government to the lower house today, while noting that the bill does not provide everything to members the AFA deemed suitable.
The AFA said it supported the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 as part of the broader Life Insurance Framework (LIF) reforms, adding it had worked to ensure a level playing field across all channels of life insurance through the drafting and consultation period.
AFA chief executive, Brad Fox, said: "The Bill does not give our members everything that we thought was appropriate but there are many other stakeholders that the Government also needs to satisfy".
"On balance this Bill, as part of the package of reforms that includes the Life Insurer Code of Practice, an ASIC [Australian Securities and Investments Commission] led Statement of Advice review project and regular reporting from insurers to ASIC on lapse rates, means that consumers can have more trust and confidence in life insurance."
Fox also emphasised that under this bill, life insurance attained through personal financial advice from a financial adviser, or life insurance bought directly through "weaker", channels such as the Internet, credit card offers or television sales would fall under the same remuneration structures and have the same clawback provisions applied to them.
"Very importantly, we have succeeded in ensuring that business models where no advice at all is provided will also fall under the regime," Fox said.
The bill also ensured institutionally employed financial advisers would also come under the same framework on 1 January, 2018, earlier than would have been the case under the older reform drafts.
Fox also noted the Government supported its calls for the pending ASIC's review to be carried out in 2021, as opposed to 2018.
An ASIC spokesperson confirmed that the corporate regulator would delay its post implementation review in line with the new transition date.
"We don't have any specific dates as the reforms have not passed the Parliament. Should they pass in a form similar to that in the previous Bill, e.g. with similar transitional arrangements, then any post implementation review would likely take place after any transitional period has ended," they said.