FSC and CALI press for institutional advice delivery
Key industry stakeholders have made clear that the Government’s response to the Quality of Advice Review final recommendations represent a broadly satisfactory obvious start but they want much more in terms of the financial advice legislative and regulatory regime.
The Council of Australian Life Insurers (CALI) wants life insurers better empowered to deliver general advice on life insurance sales, while the Financial Services Council (FSC) is concerned that the Government may fail to open up the delivery of advice solutions to enough institutions.
FSC chief executive, Blake Briggs was amongst those broadly welcoming the Government’s response but warned the Government needed to go further in what represents the second and third tranches of the exercise.
“In its second and third streams the Government is at risk of unnecessarily restricting the number of institutions that can invest in new advice solutions, which could result in too many Australians missing out on quality financial advice at key stages of life,” Mr Briggs added.
“The Government has recognised the importance of quality financial advice to consumers when they retire. FSC modelling has shown that implementation of the Quality of Advice Review’s recommendations would see retirees spending $25 billion extra in retirement by 2060, raising standards of living in retirement and reducing the cost of an aging population to the Government.
“Superannuation funds will play an important role in providing retirement advice, however if the Government narrowly implements key reforms they could fail to attract the industry investment that is necessary to deliver quality advice to the millions of Australians that would benefit from it at different stages of life.
“The Quality of Advice Review’s recommendations for a ‘good advice’ duty and allowing ‘non-relevant providers’ to provide personal advice were designed to have broad application beyond the superannuation sector, to encourage industry investment and ensure a level, competitive playing field.”
The FSC welcomes the Government’s commitment to further consult on subsequent streams of reform and encourages the Government to remain open to applying the Quality of Advice Review recommendations beyond the superannuation sector.
For her part, CALI chief executive, Christine Cupitt said her organisation believed it was important that Government legislation also allowed life insurers to provide limited advice to Australians directly when they ask for it.
“Like superannuation trustees, life insurers have additional legal duties to act in good faith and prioritise the interests of their customers,” she said.
“Life insurers support people to make informed choices about their future so they can live in a healthy, confident and secure way over their lifetime. Life insurance protects workers and their families on their best and worst days,” Cupitt said.
“This announcement is a good start but more needs to be done to help solve the unmet financial advice need for working Australians, not just those people approaching retirement. We must address the growing problem of underinsurance that is leaving people unprotected when times get tough,” she said.
“For many Australians, getting advice is too expensive or too inaccessible with just 16,000 financial advisers to turn to across the country. Of these advisers, there are just 1,000 who are helping people navigate life insurance products, which makes reforms for life insurance advice an urgent priority.”
Where a consumer does not wish to engage a financial adviser, CALI believes the law should enable life insurers to provide limited life insurance advice. This should only happen with appropriate limitations and strong consumer protections to ensure better outcomes for Australian workers and their families.
“Australians shouldn’t be waiting in line to pay $3,500 on average for financial advice, especially when life insurers want to be able to provide limited advice about their products to help people make informed decisions about protecting their future,” Cupitt said.
The buzzards, vultures and other carrion feeders are now circling to feast on the carcass of professional advice.
Vertical integration rules ok.
CALI, after LIF, now laments the lack of risk advisers??
The conniving malevolence is there for all to see. These people have no soul, integrity or any level of common decency.
Greed and unadulterated profit desires are masked with deceitful concern for ordinary Australians. This is an unmitigated lie.
They care about no one but themselves and are a disgrace.
What repugnant human beings.
That pretty well sums up how I feel.
Nice try CALI, but I think the government would argue consumers can now get low cost insurance advice… from their super fund.
Insurers, regulators, and the former LNP government colluded to try and kill off professional insurance advice and push consumers towards dodgy direct insurance. Well they largely succeeded in killing off professional insurance advice, but it looks like the dodgy direct model won’t be the beneficiary.
Now they want a ‘level playing field’. If we were all honest from the start industry should have agreed that this is how any legislation should be conceived. However I feel it’s now too little too late for FSC to take this stance. I’m somewhat happy with the compromise and I’m sure that Adviser Numbers will increase as a result of having more legislative certainty.
‘Australians shouldn’t be waiting in line to pay $3,500 on average for financial advice’. This is a bit rich, coming from the life insurance industry which has systematically white-anted financial planners over the last two decades and has been one of the main contributors to the problems we have today.
Some of the members of CALI used to be on the Board at the FSC. That FSC Board fully approved the banks bright idea for selling their no-longer-wanted life insurance arms. It was called LIF, and its sole purpose was to allow the banks to sell a promise of reduced distribution costs (i.e. less commissions to advisers) to make the tired old life insurance warhorses look attractive to overseas investors. They succeeded beyond their dreams, reduced risk commissions by 40 – 50% to advisers, and wondered why advisers started charging fees just to cope with the ASIC induced ever increasing compliance load and lousy commission, complete with a two-year clawback.
Never at a loss for words, and completely ignoring the fact that LIF is significantly responsible (add in FASEA and Apra) for the 60% downturn in new risk business, they demand more concessions. BUT that’s not a problem, all you do is gouge the hell out of those clients still holding legacy policies on your books, reference Plan For Life. Apparently with the approval of ASIC, who recently expressed “concern” about rapidly increasing legacy premiums. Seems that message didn’t get through to the insurers, because one of my clients with a Comminsure IP stepped premium policy recently copped a 28% increase in his premiums over last year. If you can get away with it, why not.
Now these bunch of geniuses are asking the government to license them to provide advice to consumers. Vertical integration supreme! Rollout all the dodgy products with pre-disability exclusions and definitions of injury which require a witness to stand on the edge of the road and watch the insured get hit by the #9 bus, with a good toss in the air (” visible and violent” ). In America, trauma definitions have a survival period of six months for stroke benefits, and you can bet they’ll be on the market for direct sales within a year. Return to COVID exclusions anyone?
They’ll all increase their Policy Preservation Units, and their poorly trained backpacker call centre operators will glibly inform an IP client they can save 30% on their IP premium, if they move from a 30 day waiting period to a 90 day waiting period, without investigating the clients personal particular financial circumstances, in an environment of ever increasing costs on basic food items.
I wonder, is Mr Jones that silly to let these bunch of foxes in charge of the henhouse.