The Assistant Treasurer, Kelly O’Dwyer, says no further changes will be made to the proposed Life Insurance Framework (LIF) following a delayed start date and changes to clawback provisions previously announced.
Speaking after a Financial Services Council breakfast in Sydney on Monday, O’Dwyer told Professional Planner that as far as the government is concerned, “What we announced the other day, that’s it”.
“That’s it. It’s all done and dusted now,” O’Dwyer said.
“We’re all done on life insurance. We think we’ve got the balance right there. We’ve got the balance between protecting consumers and their interests and an alignment of their interests with the remuneration of advisers.
“And we’ve toughened up the response that the government will make after a two-year period, if in fact there has been no progress, through the ASIC report.”
O’Dwyer announced on November 6 that the start date for the LIF has been pushed back to July 1, 2016, from its original start date of January 1, 2016.
In addition, the controversial clawback period was reduced to two years from the three years recommended in the final Trowbridge Report.
Report in 2018
Progress on implementing the reforms and the effect of the reforms on improving consumer outcomes in the life insurance space will be the subject of a report by the Australian Securities and Investments Commission in 2018.
O’Dwyer also told Professional Planner that transitional arrangements for the introduction of higher professional, ethical and education standards for financial planners will be revealed for consultation before the end of the year.
She said the period would be long enough to accommodate those who want to raise their standards to the required level, but there is a limit to how long it can be extended.
“You need to have an adequate period for those people who have been in the industry for a while to get up to the standard that should be a baseline for the industry,” O’Dwyer said.
“We need to give people the opportunity to do that, to be able to reach that standard. But as you say, the transitional period won’t go on forever. I’m not going to make the announcement today but we will make that announcement in the very near future.”
O’Dwyer said draft legislation would be released for consultation “right towards the end of the year”.
Committed to raising standards
In a speech to the Financial Services Council Political Series event on Monday, O’Dwyer said the government’s financial system program “commits to raising professional, ethical and education standards for financial advisers”.
“Subject to transitional arrangements, advisers will be required to hold a degree, pass an exam, undertake continuous professional development, subscribe to a code of ethics and undertake a professional year before they can advise clients,” O’Dwyer said.
“These higher standards will place financial advice on a similar footing to other professions and, in doing so, increase consumer trust and confidence in the sector.”
O’Dwyer said collaboration between the government and industry would be important in establishing “an independent standards-setting entity which the government will recognise in legislation”.
“Legislation will be consulted upon this year,” she said.