More work needs to be done beyond the legislation underpinning the Life Insurance Framework, (LIF) including more work on the part insurers, superannuation funds, and the regulator to carry their share of life insurance reform, according to the Association of Financial Advisers.
Commenting on the passage of the legislation underpinning the LIF, AFA chief executive, Brad Fox pointed to the load which had been carried by life/risk advisers and said his organisation would be working to focus attention on completion of the remaining reforms by other players.
Fox's comments came at the same time as Financial Services Council (FSC) chief executive, Sally Loane welcomed passage of the legislation and said it would strengthen consumer outcomes and benefit both financial advice and life insurance.
"We thank Minister O'Dwyer for her support and ongoing leadership in driving these reforms and thank the Parliament for the bipartisan support it has provided to these reforms," Loane said.
Reflecting the level of angst amongst risk advisers about the LIF, Fox emphasised that the AFA's advocacy had resulted in improvements to the legislation including a level playing field for advisers, with no carve-outs for direct sales of life insurance; a delayed and consistent start date of 1 January 2018; uniform grandfathering of existing clients; the inclusion of policy fees and frequency loadings for commission calculations and greater fairness in the clawback rules.
"We were able to explain to Government the impact of LIF legislation on small business advisers and this is what we believe helped us achieve improved final outcomes when compared to the recommendations put forward by the FSI and the FSC," Fox said.
"The Government listened to adviser concerns."
In a statement issued following passage of the legislation, the Minister for Revenue and Financial Services, Kelly O'Dwyer extolled the consumer benefits and pointed to the fact the ASIC review had "highlighted a connection between high upfront commissions and poor consumer outcomes".
"The review found that in some cases, advisers were receiving high upfront commissions of up to 130 per cent of the premium, which has led to unnecessary product replacement," she said.