The legislation underpinning the Life Insurance Framework (LIF) will be introduced to the Parliament next week, with the Minister for Revenue and Financial Services, Kelly O’Dwyer, referencing “churning” as a major reason for the changes.
Speaking on national radio, O’Dwyer made the Government’s position clear stating that the legislation would “make sure the current conflict that exists right now, where life insurers can have 120 per cent of a premium in an upfront commission, can no longer continue because they are churning through clients”.
The impact of the LIF legislation will be debated by a panel, including Bombora Advice head, Wayne Handley, at a Money Management breakfast on 27 October.
The minister’s comments came barely 24 hours ahead of an extraordinary general meeting (EGM) of the Association of Financial Advisers (AFA) which will debate constitutional changes aimed at avoiding a repeat of the LIF processes.
The minister said that the churning had been identified in three separate reviews.
O’Dwyer referenced the LIF in the context of legislative reform packages necessary to restore consumer confidence in the financial services sector, saying that the sector had not always lived up to expectations.
“We have got legislation now prepared that will be brought into Parliament this year to actually raise the standards for financial advisers, raise their training, ethical and professional standards that will mean they are held to a much, much higher standard. It will make it much more difficult for somebody to go to a dodgy financial adviser and get bad financial advice,” she said.
“We’re bringing in legislation next week for life insurers to make sure that the current conflict that exists right now, where life insurers can have 120 per cent of a premium in an upfront commission, can no longer continue because they are churning through clients according to three separate reviews.”
