LIF branded ‘most damaging’ pieces of legislation

Speaking on a recent ifa podcast, Eugene Ardino, CEO of Lifespan Financial Planning, said the LIF has certainly been one of the most damaging pieces of legislation over the last decade.

In relation to the Quality of Advice Review (QAR) and its recommendations regarding life insurance, Mr Ardino said he is “glad” nobody is suggesting that it needs to be made worse.

“Everybody’s got mixed feelings about commissions, but at the end of the day, what’s more important? More consumers getting access to insurance advice?

“Because at the moment, unless your premium is quite high, advisers are just walking away from that advice because there are too many risks for the adviser. It’s a ton of work and consumers basically don’t like to pay fees unless they’re in the wholesale client area,” Mr Ardino explained.

Expounding on the topic, he noted that high-income earners are generally “quite comfortable” paying those fees.

“With all due respect, everybody wants those clients, but they generally have the capacity to pay whatever they need to pay to get the right level of adviser,” Mr Ardino said.

“If they want an adviser with lots of tertiary education they can afford that. I don’t know that we need to reform the industry just for them. They’ve got the ability to go and shop around for as long as they need to,” he continued.

“I think we should probably be balancing that with accessibility and also recognising that when consumers don’t get insurance advice, when they don’t buy insurance, that is going to strain the government, that’s going to strain the welfare system, and everybody hurts from that.”

Back in November, the QAR reviewer, Michelle Levy, published a snapshot of the data the QAR had considered on general insurance and life insurance, and a set of proposals.

Among those proposals, she suggested financial advisers, who provide personal advice to retail clients in relation to life risk insurance products, be required to obtain their client’s informed consent, in writing, in order to be able to receive a commission from a product issuer.

Subsequently, concerns were raised by advisers in relation to what additional obligations would apply in relation to disclosure, consent and ongoing services. 

In November, in a post to his LinkedIn profile, the chief executive of the Association of Financial Advisers (AFA), Phil Anderson, revealed that Ms 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 said.

To hear more from Mr Ardino, click here.