Industry superannuation funds have told a Senate Committee that the Government's legislation underpinning the Life Insurance Framework is 'relatively feeble' when it is compared to the approach recommended by both the Financial System Inquiry and the Trowbridge Report.
What is more, the industry funds have warned the committee that the legislation has still failed to eliminate the "opportunity for payments from life insurers to advisers".
The criticisms are contained in a submission from the Australian Institute of Superannuation Trustees (AIST) to the Senate Economics Legislation Committee inquiry into the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016.
The submission argues that the provisions in the Bill are "relatively feeble compared to the approach recommended by both the Financial System Inquiry and the Trowbridge Report".
"We note that the Financial System Inquiry, which recommended banning upfront commissions, whilst the Trowbridge inquiry recommended eventual transition to an initial advice payment (IAP) and level commissions of 20 percent of premiums," the submission said.
"We note that this Bill will still provide the opportunity for payments from life insurers to advisers and consequently, we do not support the provision to allow the Australian Securities and Investments Commission (ASIC ) to make criteria that allows for these payments.
The AIST submission urged the inclusion of a sunset clause "to ensure that it is eventually phased out, along with commissions, generally".