The LICG welcomes news that a government has been formed and we can now move forward with essential life insurance industry reform. Clearly Australians have indicated that the short-term politics driving some decision makers in recent years is unacceptable.
The LICG believes this election outcome shows that Australians are looking for a Government that works collaboratively and with true consultancy, for a future built on strong, big-picture, considered, evidence-based policy.
The LICG emphasises that the proposed LIF ‘reforms’ are classic political short-termism. This proposed legislation has no identified positive outcome. There is no empirical evidence to show value in these broad scale remuneration ‘reforms’. In fact there is mounting evidence that LIF legislation as proposed will benefit FSC members to the detriment of many Australians and small business advisers.
The government must look at all the evidence, and notice where there is no evidence, before reintroducing this ill-formed legislation.
According to many years of media reports, FSC members have been responsible for major failings in the financial services industry. They have not been held to account by the FSC Board or Government, despite many enquiries. LIGC members hope that the imminent “Scrutiny of Financial Advice” (SoFA) enquiry will be effective.
We urge the new government to be sure the FSC is deserving of the trust put in them in allowing them to drive LIF ‘reforms’. We ask the new government to look for the reasons why the FSC, with their deep pockets and lobbying expertise, relentlessly calls for the LIF legislation to be rushed through.
We urge the government to question why the FSC will not answer simple, reasonable questions asked by the LICG and many others:
What is the supposed ‘significant benefit’ to consumers?
Why legislation when we could have gone to the ACCC for approval of remuneration changes?
Why no definition for, or data to explain, the alleged ‘churn’ problem?
Why life insurance is to be the only industry in Australia protected from consumer scrutiny of the quality of their offer – in price or features/benefits?
Why deliberately circumvent Minister O’Dwyer, the AFA and FPA to have Direct carved out of the reform legislation?
Does the FSC agree with Mr Trowbridge’s view that advisers are “getting in between” insurers and customers?
What are the statistics on pricing, lapse rates and claim outcomes for consumers under Direct or Group?
We urge government to look at the whole life insurance industry through the SoFA enquiry before revised LIF legislation is reintroduced.
From the actions of the FSC, the idea is that all Australians should rely on insurance in super funds, get bank ‘advice’, or go on-line to buy, or replace their policies with ‘cheaper’ ones as encouraged by media.
Australians need independent advice that looks at the options in all insurance distribution channels. Without advice, unsuspecting purchasers don’t know what they are not getting from these distribution channels. Those unadvised options are more profitable for insurers.
Significant evidence shows systemic issues for consumers are insurer based, not adviser.
Advisers engage every day Australians at grass roots level. We see what our clients get, and don’t get, when they access insurance through Group, Direct and vertically aligned channels. We see clients impacted by insurer decisions every day. We should be writing the Code of Conduct!
Advisers work for consumers. Who do insurers and the FSC work for?
LICG members have worked tirelessly to become a considered, respectful voice in the LIF debate. We will continue to work directly with regulators, and are grateful to officials who have listened, and seek a thorough understanding of the issues. We will continue to contribute to the re-referred senate SoFA enquiry, and all members of our new parliament.
If the LIF legislation is to be reintroduced, it must be evidence-based, consumer-focused, long-term policy that fits in with review of all life insurance industry participants. Transparency and integrity must be part of the debate.
The LICG members are asking for a responsible, respected Life insurance industry that can provide those in need with financial certainty and dignity. This is vital for Australians, socially and economically.
We urge the new government to ask the right questions and listen. The exploration of the real issues impacting the industry’s reputation and recommendations for reform must be via good policy, and be above politics.
