Retain life insurance commission: FPA
The Financial Planning Association of Australia (FPA) has rejected proposals to ban commissions as it could leave consumers chronically underinsured and dependant on social security.
There had been a number of calls for the banning of all remaining conflicts of interests including life insurance commission, in light of the Quality of Advice Review’s proposals on the Life Insurance Framework (LIF).
This had been proposed by consumer advocacy groups such as Choice and Industry Super Australia.
FPA chief executive, Sarah Abood, said: “By banning commissions, we’d effectively be removing consumers’ ability to choose how they wish to pay for their advice.
“Multiple research studies have shown that a high proportion of consumers would not purchase insurance at all if they were required to pay an upfront fee. So the result would be that far fewer Australians would have appropriate insurance protection in place.”
Retail advised new life insurance business volumes were already expected to fall over the next few years as the number of advisers providing advice on life insurance had declined and the remuneration for this had also declined.
She said she welcomed the findings by the Review that showed a significant improvement in quality of life insurance advice provided over the past four years and said this was being disregarded by those who sought a commission ban.
“This improvement has not been acknowledged by consumer groups. These groups have taken a position that it is impossible to deliver a quality service to consumers where any conflict exists, but the data shows this is not the case.”
The FPA had previously stated it would like to see the two ASIC life insurance advice file reviews and a life insurance data collection used for the review to be further assessed to properly determine the outcome.
AUTHOR
Laura Dew
Recommended for you
Results are out for the latest sitting of the ASIC financial advice exam, with the pass rate falling for the second consecutive sitting.
Adviser losses for the end of June have come in 143 per cent higher than the same period last year, and bring the total June loss to over 350.
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
Still haven't seen one premium go down since they saved so much money on commissions... Royal Commission into the insurance industry and the LIF review I think.
Best not say that out loud - the Consumer Groups and the Bureaucrats in ASIC/Treasury probably haven't yet been told this (they would need to spend Millions of $$$$ doing a study to find this out) and if they knew, would likely just blame it on Putin. Lets face it facts, it is very unlikely Commissions were reduced to help consumers - I reckon they just want Financial Planners out of way so Product Manufactures can control delivery via Industry Super - but I could be wrong?