Industry bodies unite to protect life insurance commissions

As reported by Money Management some weeks ago, the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) have teamed up to form a life insurance taskforce, in preparation for the corporate regulator’s review of the Life Insurance Framework (LIF) in two years’ time.

The show of unity came after similar joint actions from the two professional associations, such as a joint code monitor application, who seemed to have learnt a lesson from how mortgage broking industry bodies previously managed threats to its commission system by showing a unified front.

Indeed, AFA chief executive, Philip Kewin, cited a combined association approach as key in securing a life insurance industry that delivers the best possible outcomes for consumers after the 2021 Australian Securities and Investments Commission (ASIC) review.

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"We believe it is very important to have a united and consistent message from the advice community about the future of life insurance, that we can share with Government and the regulators," he said. "This will also allow us to work collaboratively as a community with Government, towards the shared goal of great outcomes for consumers."

One focus of the taskforce would be to improve the general understanding of consumers of the importance of having choice in how they pay for life insurance advice, suggesting that the body would be pitching to keep commissions.

“The aim is to create greater understanding of financial advice, the role of advisers and how life insurance commissions offer consumers an affordable way to access life insurance advice,” Kewin said.

The taskforce, which would consist of two senior representatives and two advisers from each organisation, would also report back to advisers with a common view on what would be required of them after the 2021 review.

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Maybe just retain commissions for advises insurances and scrap them for policies sold under general advice

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