Retain LIF arrangements, pleads AFA

In an email sent to members earlier this week, the AFA reassured them that they “should be in no doubt” the industry body will be strongly arguing for the retention of the existing Life Insurance Framework arrangements.

“We anticipate that some members will have a strong interest in Question 8, which relates to the continuation of life insurance commissions, Question 10 on the direct sale of life insurance and Question 12 on approved product lists,” said AFA chief executive Philip Kewin in the email.

“Other members will have a detailed interest in the issues that are raised with respect to claims handling and insurance in superannuation.”

Last month, the Hayne commission released its insurance policy questions following the conclusion of the hearings.

The questions covered a broad range of topics including product design, disclosure, sales, add-on insurance, claims handling, insurance in superannuation, scope of the Insurance Contracts Act, regulation, and compliance and breach reporting.

The AFA showed concerns upon reviewing the Volume 1 section on financial advice that the report “does not suggest a good understanding of financial advice”.

It also said it is apparent that the Hayne commission doesn’t seem to acknowledge the AFA’s submissions to date.

“They have specifically focused attention on issues related to adviser remuneration, including such important issues as life insurance commissions, ongoing adviser service fees and grandfathered commissions,” Mr Kewin said.

“While we understand the myriad of complexities and issues with adviser service fees and grandfathered commissions we cannot see any justification for a review, let alone removal of life insurance commissions.”

Further, the AFA noted it will have more to say in its submission with respect to the flaws in the interim report’s position on grandfathered commissions. 

“We will be working hard to ensure that the level of [understanding] of these issues is improved and that any recommendations in the final report are based upon a real understanding of the issues and the implications for ensuring the best outcome for clients,” Mr Kewin said.

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].