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The Financial Planning Association of Australia (FPA) welcomes the clarity provided through the passing of the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 by Parliament today.
Ben Marshan CFP®, Head of Policy and Government Relations, said the passing of the legislation brings an end to the ongoing uncertainty for FPA members and their clients:
“Our members have expressed uncertainty when recommending life insurance solutions to their clients, in light of the information vacuum on life insurance since May. The passing of this legislation addresses these concerns and creates certainty for members when discussing and recommending life insurance.
“The new legislation will eliminate loopholes that life insurance companies could use to remunerate their staff for selling certain policies directly without providing advice to consumers. This will ensure a level playing field for financial planners and help consumers by ensuring they are encouraged to seek advice from a professional financial planner. ASIC’s report into life insurance claims released on 12th October found that consumers who take out policies with the assistance of a financial planner have a lower rate of claims denial than those who take out policies sold by an insurance company directly.
“The changes will commence on 1 January 2018. This will give financial planners sufficient time to prepare for the changes by transitioning their business models and preparing for the new revenue levels which will be introduced.
“All in all, the new legislation is a positive development that will enable FPA members to continue assisting Australians in planning for their financial future, whilst ensuring their clients are protected by the right level of insurance cover.”