FSC supports level commissions if LIF fails

The Financial Services Council (FSC) has declared its support for a move to level commissions and fee for service arrangements if the Life Insurance Framework (LIF) fails to meet its objectives.

The FSC has used its statement of policy priorities to declare its position, albeit stating it's hoped that the existing LIF approach works as planned.

The FSC document points to the need to monitor the outcome of the new LIF regime "to provide additional integrity around adviser behaviour" and pointed to the review slated to be undertaken by the Australian Securities and Investments Commission (ASIC).

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"ASIC will undertake a review of the reforms which will consider whether there is significant improvement in practices," the policy priorities document said.

"FSC supports reviewing the application of the reforms and believes a commitment to move to level commissions and fee for service remuneration arrangements is necessary if the reform is failing to achieve its objective."

Referring to the terms of the LIF, the FSC said the arrangements allowed the continuation of upfront commissions at levels that provided support for the independent adviser market, and also provided for an appropriate transition to remuneration practices "that are better aligned with consumers' interests'.

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Yes Minister, double speak.

........ and that is exactly what they wanted from day 1. Not sure how that will help consumers. In the long run, level commission costs the insurers more so good luck seeing that help reduce premiums !!

AS usual, the changes do NOT fix the so called problem.

It will if the level premiums are 20/20....

This is such a joke. The LIF won't meet desired objectives as we all know. They will somehow justify all level by saying 'we still have an underinsurance problem, fee for service or level premiums must be what we need to win trust of consumers!'....

FSC go jump you do not run our industry you are a pawn of the establishment being funded by the banks/insurers and with an objective to destroy the financial advisers who operate independently of the banks, the LIF legislation is dead and so is your influence on policy, as was shown with your lack of reporting or influence on the so called banking industry rules you so vermently introduced but failed to apply to comminsure and the other banks.

Really! The FSC supports level or fee for service! Read the FSC submission to Trowbridge . The large vertically intergrated product......sorry I mean the FSC, have pushed for that since day one. And have constantly inferred such since. Old news.

Would the FSC kindly articulate, very exactly not in a rhetorical, unmeasurable, untestable statement, the objective they are seeking to achieve in the proposed LIF 'reforms'? Despite many, many requests the FSC have still not stated one 'significant consumer benefit', nor have they provided any baseline data around 'churn' from which to measure 'outcomes'. Let's have some honesty and integrity at the FSC.

Agree Mike and also let's see how many of the FSC self interested conflicted insurers are still around in 5 or 10 years, especially if one contrarian quality insurer (not necessarily currently operating in Australia) comes in with a different proposition for risk writers closer to their current arrangements.

If I was a major offshore operation in this space, I would salaciously be watching on hoping this self-indulgent rhetoric from the FSC eventuates into actual stupidity, allowing the margin and market share exposure to open up so I could swoop in... ala Aldi taking significant market share from Woolworths when it refused to budge from its exorbitant 8% margin levels.

Great point Joe, starve the fat cats of our business and see how long the FSC lasts then with their non underwritten high risk corporate and direct offerings not being subsidised by fully underwritten advised clients. Bunch of self interested navel gazers. Of course they support level commissions, they support anything that makes the FSC members more money! Self interest abounds in this industry, all the way up the chain , and it gets worse as you move further up it, and its all in the guise of whats best for the consumer, yeah right.

So the FSC thinks they need to monitor adviser behaviour do they? What about monitoring insurance company behaviour? One company just put my client's premiums up by 25%! If I switch the client to a cheaper policy, they will probably acuse me of being a badly behaved churner! When flat commissions or no commissions are introduced, as they clearly wish, I will be incentivised for complacency. By leaving my clients in a higher cost policy I will earn more money and I won't have to do the leg-work to replace the policy. This nonsense from the FSC is seriously bad for consumers. Where is ASIC, the ACCC and our professional bodies on this? Are they really so stupid that they can't see what is going on here?

Australia seems to be run by self appointed little dictators who tell self employed people what they are limited to in earning capacity. Yet these same people take their fat salaries while imposing limits on earnings to real working people who take responsibility for their actions through imposed overheads. The FSC employees come out with double speak language which says nothing clearly but continue to wave a big stick to scare and frighten legitimate small business people. Just another layer of stupidity in a sea of self importance.

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