FPA members back ‘insurance blueprint’

After releasing its ‘blueprint’ to its members for consultation, the FPA said more than 1,000 of its members have given feedback, with 71 per cent supporting the proposals.

Fifty-five per cent supported the proposed hybrid styled remuneration model “capped at four times ongoing payments”.

Also, 67 per cent of the members who responded believed the remuneration model would enable them to continue providing insurance advice and services.

The FPA also said its proposal for life insurance companies to implement options to “dial down commission from the product” and dial in an adviser fee gained support, with 78 per cent backing the proposals.

However, of those who disagreed with the model, 50 per cent wanted to reduce upfront commission payments further, while the other 50 per cent wanted to retain the status quo.

Speaking to Risk Adviser, FPA chief executive Mark Rantall said it was not “overly surprising” that members of the FPA want the status quo to remain.

“Change is difficult, and to be fair, the upfront commission payment, particularly for lower value cases, barely covers the cost of providing advice,” Mr Rantall said.

“Some of our members have moved to fee for service and others have the full commission model in place – it does depend on the type of client you are servicing as to what model works for the business.”

Mr Rantall also said the next step for the FPA will be to liaise with all stakeholders, including the AFA, to finalise the ‘blueprint’.

“We are taking all [feedback] on board and finalising that blueprint and we just continued to work with all stakeholders and to see if we will get an outcome that protects consumers, acceptable for the future sustainability of the industry,” he said.