The FSC feel they are justified to tarnish and punish all 23,300 advisers licensed to provide personal insurance advice because of ASIC ‘findings’ based on 37% of 79 targeted advisers.
Worse, in their proposed ‘LIF reforms’, members of the FSC seek to reduce adviser remuneration to a point where, unless the client’s premium is more than $5,000 pa, it will not even recover adviser costs.
Why is the FSC comfortable with threatening the ability of advisers to provide advice to non- sophisticated, not high net worth Mr & Mrs Consumer, and threatens the very viability of many small adviser businesses? There would appear to be other motivations at play.
The Life Insurance Customer Group (LICG) asks the FSC: where is your justification?
The FSC has not provided any evidence, reason or data on which to base their ‘reform’ recommendations. Their commentary constantly points to a proposition of ‘churn’, not concern about quality of advice on any other basis, not industry sustainability, not the systemic poor institutional culture that Messrs Medcraft and Kell keep talking about and the media continually provides evidence of, and not professional education standards. The FSC didn’t look for, or measure, any of these things when they directed ASIC in Phase 1 of the ASIC research. And for the record – it would appear that ASIC didn’t ask anyone but members of the FSC to assist in Phase 1 when they were designing their research project!
In their 2016 Senate LIF enquiry submission, the FSC states: “We note that further investigation by ASIC will be needed to tell the difference between those advisers ‘churning’ policies and those advisers acting in the best interests of clients.”
That is worth repeating.
The FSC are looking to ASIC to substantiate their ‘churn’ problem (the stated reason for the ‘reforms’) and justify their ‘reform’ measures, in 2018 AFTER the reforms are to be introduced.
What if all policy replacements were found to be in the client’s best interest??
The FSC appears to have designed LIF ‘reforms’ that only address an implied ‘churn’ problem and almost NOTHING ELSE.
The LICG asks: Is it possible that the FSC has used ASIC to manufacture a justification to blame 23,300 advisers for an unproven issue so as to deflect attention from insurers’ behaviours that are proven to be so detrimental to consumers? We ask – how has the FSC managed this-
• Despite NOT having any evidence for ‘churn’?
• Despite NOT actually having defined ‘churn’?
• Without offering any rationale as to their proposed remuneration models?
• Without explaining why all new business, not just replacement business (which ‘may’ be churn), should be impacted?
• Without explaining how a drop in adviser remuneration can result in a consumer benefit that only insurers can provide, when there is no obligation on insurers in LIF to do anything?
• Without making any assessment on the impact of the ‘reforms’ on adviser businesses and, therefore, consumers?
• On the basis of the reported outcomes of a relatively few advisers who should have been picked up in compliance audits by their licensee well before the research? and
• Without being able to express one single consumer benefit as an outcome?
It looks like the FSC doesn’t like questions that don’t fit their propositions.
Somehow they get away with not providing answers when obvious questions are asked.
It also looks like there is more going on than ‘fixing churn’. There is no evidence that their ‘reforms’ have anything to do with taking care of consumer outcomes and are all to do with negatively impacting on all advisers.
If advisers give insurers the opportunity to take their insurance products to the market (our clients) it doesn’t make sense that insurers would threaten their own capacity to distribute.
….Unless there was something else going on????
We had initially thought this looks a lot like ‘shoot first, ask questions later’, but now it would appear that it is just “shoot first”. There will be no questions. And talking about unanswered questions of the FSC – some key ones are piling up:
• What are the ‘significant’ consumer benefits in the LIF ‘reforms’?
• Why LIF legislation? Why not go to the ACCC to have the ‘reforms’ agreed there and implemented a year ago?
• And why has the FSC orchestrated a carve-out of ‘Direct’ behind the back of the AFA and the FPA, and Minister O’Dwyer?
