FPA asks for ‘proper review’ of LIF outcomes

In its submission to the Quality of Advice Review (QAR) – Conflicted Remuneration Paper, the Financial Planning Association (FPA) expressed its disappointment with the exclusion of the outcomes of the Life Insurance Framework (LIF) Review — which included two ASIC life insurance advice file reviews and a life insurance data collection.

The FPA’s chief executive office, Sarah Abood, said that as a result of this exclusion, the Conflicted Remuneration Paper, released on 31 October, “leaves more questions than answers”.

“And for this reason, the FPA recommends a proper review of the outcomes is conducted. This should include a further round of file reviews to also consider the outcomes of the professional standard framework,” Ms Abood said.

She argued that the FPA does not believe enough time has been allowed to consider the outcomes of the ASIC file review or ASIC/APRA data gathering outcomes to properly assess the outcomes of the LIF review.

“Additionally given the other regulatory changes which have taken place during this period, more research and consideration of consumer outcomes in relation to life insurance cover is required. The FPA therefore recommends a standalone review is conducted, including more file reviews,” Ms Abood said.

In relation to the proposals contained in the QAR paper, Ms Abood said “the FPA is supportive of all proposals”.

Regarding the requirement for financial advisers or insurance brokers to obtain informed consent from their clients in order to be able to receive a commission from a product issuer, Ms Abood said that the FPA supports the proposed recommendations “following the clarification provided by the review at meetings on 11 November”.

Acknowledging the concerns raised by members in relation to what additional obligations would apply in relation to disclosure, consent and ongoing services, Ms Abood encouraged the final report to “make clear that where these obligations are already complied with in relation to personal advice by a relevant provider, no additional obligations are required to be met”.

Earlier this week, in a post to his LinkedIn profile, the chief executive of the Association of Financial Advisers (AFA), Phil Anderson, revealed that QAR reviewer Michelle Levy confirmed at a meeting with the group that the consent requirement “would be a [one-off]”, and not an annual requirement.

“Where consent has previously been obtained from the client, it would not be required again,” he confirmed.

Providing an example, Mr Anderson explained that if the upfront and ongoing commissions were previously disclosed in an SOA and the client signed the Authority to Proceed, “then this is consent and nothing more would be required”.