Does FASEA want life commissions scrapped?

Synchron director Don Trapnell told ifa FASEA’s updated code of ethics guidance, released earlier this month, had “raised more questions than it answered”, particularly in regard to insurance-only advice.

The updated guidance around Standard 4 included an example in the frequently asked questions section around whether advisers needed to contact previous insurance-only clients around ongoing fees.

The guidance specifically stated that advisers receiving commissions from these clients would need to contact them to “confirm there are no changes in their personal circumstances which would impact the financial product advice recommendation and to confirm the client’s ongoing consent to act”.

“When the adviser did the insurance policy initially they gave either a customer advice record or a statement of advice which clearly set out the terms of engagement, so why would Standard 4 indicate they’ve got to go back to a client and do it again?” Mr Trapnell said.

“It seems to my mind that FASEA is making an effort to have its own agenda in relation to the ongoing risk commission system, and I don’t think that's the purview of FASEA.”

Following recent comments from the federal opposition that the industry would need to prove life commissions were worth maintaining in ASIC’s 2021 review, Mr Trapnell said it was essential commissions be retained at current levels to ensure adequate support for clients at claim time.

“Some people make the mistake of calling renewal commissions servicing commissions, but they are the commissions that are paid by the provider so the product stays on the books and ensures they have the revenue to be able to handle the few customers that make a claim,” he said.

“The cost of managing a claim for a consumer is many times greater than the renewal commission that is being received, but it’s an ability for an adviser to have an income stream coming in to provide when the customer needs it the most – at time of claim.”

The comments come as Synchron bolstered support for Victorian advisers through the appointment of a new state manager from MLC Life Insurance.

Sarah Congdon joined the advice group as of 26 October after 10 years as a business development manager at the life insurer, as well as a previous role in insurance advice for Commonwealth Bank.

Ms Congdon, who serviced Synchron as a client in her previous role at MLC, said she had “always been impressed by the Synchron culture” and was looking forward to working with Victorian advisers to explore opportunities for business growth.