Synchron accuses FSC of misrepresenting churn figures
Dealer group Synchron has accused life insurance companies and the Financial Services Council (FSC) of deeming all discontinued life policies as churn, and presenting figures as such to the Federal Government.
Synchron director Don Trapnell said the Future of Financial Advice (FOFA) draft legislation presupposed that advisers who moved clients from one product to the product of another insurance company were "churners" and "out to financially benefit themselves".
"This presumption is quite simply wrong, and seems to have been predicated on a move from the FSC in its representations to the Minister of Financial Services Bill Shorten," Trapnell said.
"Over the past few years, life companies have had a very strong push to try to reduce their lapse rates and increase their rates of retention of the policies on their books," he added.
"To aid them in this cause, the FSC appears to have taken statistics relating to lapse rates to the Government and convinced them they are evidence of adviser churning."
According to Trapnell, even policies which have "run their course" - and in the case of one life company, death claims - had been counted as churn by risk companies.
The draft FOFA regulations include level adviser commissions for rewritten policies and a two-year commission responsibility.
"I don't think there is a professional adviser out there today who has not reassessed a client's situation within five years and made some recommendation where it has been appropriate to do so," Trapnell added.
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