The Financial Planning Association and the Association of Financial Advisers have come together to form a life insurance taskforce on the back of a discussion initiated by AIA Australia and facilitated by Professional Planner.
The AFA’s Phil Kewin and the FPA’s Dante De Gori announced during a roundtable held in Melbourne in late May the two representative bodies would join forces to present a united voice for the life and risk insurance industry. The Melbourne roundtable discussion is the first in a series to be held this year, culminating in an inaugural Life Risk Summit to be held in Sydney in September.
“We would like to come out with a single voice and position,” De Gori announced during the discussion chaired by former Labor MP Bernie Ripoll and attended by several prominent life insurance advisers.
“There are a lot of things out of our control, including the royal commission recommendations and some parts of the political process. What we can control is what we do, our actions and the decisions we make. There is absolutely an opportunity for us to talk about what we can do and how we represent our views,” De Gori commented.
Since the initial roundtable discussion, the two associations, representing approximately 15,000 members, confirmed the life insurance task force would be made up of two senior representatives of the AFA, two senior representatives of the FPA and four advisers – two from each association.
A key focus of the AFA and FPA taskforce will to help improve the general understanding of the role financial advice plays in improving insurance outcomes for consumers and the importance of offering them choice in how they pay for that advice, the AFA’s Philip Kewin said in a statement on Monday.
The focus on consumer outcomes will be carried through to the second AIA/Professional Planner roundtable discussion to be held in Canberra in late July, where public policy representatives from Treasury as well as from both major political parties, along with heads of representative bodies and senior industry participants, will be invited to participate.
“If we put better consumer outcomes first, that can only be good for people needing insurance, as well as for the sector,” Ripoll said to open the discussion in Melbourne last month.
The life insurance industry movement, designed to shape policy outcomes, has been likened to the movement led by the mortgage broking industry earlier in the year, the result of which ended in policy makers first accepting and then rejecting the Hayne royal commission’s recommendation to ban trailing commissions paid by lenders.
Commissioner Kenneth Hayne in his final report following the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, recommended commissions from the sale of life insurance should be reduced to zero unless an ASIC review, scheduled to take place in 2021, found “clear justification” for their continuation.
The Life Insurance Framework was introduced under former financial services minister the Kelly O’Dwyer, requiring a grandfathering of all remuneration arrangements entered into before January 1, 2018; a phased reduction to a maximum of 60 per cent upfront/20 per cent ongoing by January 1 2020; a two-year clawback period for upfront commissions; and a ban on volume-based payments. The legislation also called for the development of a Life Insurance Code of Practice and a subsequent ASIC review of the changes in 2021.
The AFA and FPA also came out together recently in support of an extension to the deadline for the FASEA exam.
The AIA and Professional Planner policy and industry discussions this year, along with the AFA and FPA’s taskforce, will aim to bring the insurance and advice industry together as a single voice in advance of the slated 2021 review.