Synchron calls FSC remuneration model anti-competitive
Synchron director Don Trapnell said his company would never support a model for adviser remuneration that was imposed by a cohort of life insurance companies and the Financial Services Council (FSC), but would adopt a model if it were driven by competitive forces.
"What we are seeing now is life insurance companies, via their association with the FSC, working together to form a policy that imposes a uniform remuneration model with uniform responsibility periods on advisers.
"That is anti-competitive and Synchron will never support that kind of behaviour," he said.
Trapnell said changes to responsibility periods had been driven by competitive pressures in the past.
Competition should continue to dictate any further changes in adviser periods, he said.
The FSC's proposal includes a claw-back arrangement where 100 per cent of upfront commissions are returned to the insurance company in the case of a policy lapsing within the first year, 75 per cent if it lapses within two years and 50 per cent if it lapses in the third.
Trapnell said insurance policies lapsed for a variety of reasons.
"This is not the fault of the advisers and advisers should not be penalised for it," he said.
While a Money Management forum last month found churning was not as widespread as many industry critics suggested, the Australian Securities and Investments Commission (ASIC) said its work had identified it as a real problem and supported the FSC's proposal.
Both the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) have supported elements of the proposal; however, the most contentious issue for advisers has been around the claw-back provisions.
Suggestions by the AFA, FPA and respondents at Money Management's forum indicated the most likely resolution was a hybrid remuneration model.
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