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The Financial Planning Association of Australia (FPA) has welcomed today’s Government announcement of a final reform package for retail life insurance.
“The Government’s final response to proposals by The Hon Josh Frydenberg MP on 25 June and the FSI Report, is a sensible outcome that will help ensure the sustainability of the industry,” CEO of the FPA Mark Rantall said.
Mr Rantall commended Assistant Treasurer and Minister for Small Business Kelly O’Dwyer for consulting and listening to the profession and addressing industry concerns that arose from the earlier June announcement.
A key area of concern for business sustainability had been the new retention (‘clawback’) provision of three years for commissions. As a result of combined representation by the AFA and FPA, the provision will move from a three to a two year clawback period.
The Government has announced that these changes will apply across all channels, including personal advice, general advice and direct life insurance.
Mr Rantall said “The FPA supports the need for a model that enables financial planners an appropriate amount of time to transition. We believe that the staged approach to the new commission structure achieves this.
“The FPA also believes that expanding education, strengthening enforcement and removing other conflicted payments, including volume rebates and payments, is necessary to the overall package of initiatives.”
The Government also announced that the industry will have responsibility for widening Approved Product Lists, through the development of a new industry standard.
Mr Rantall concluded: “Today’s announcement is a sensible outcome, and one that will help ensure the sustainability of the industry. We are deeply committed to supporting members through these changes and encourage members to make use of The FPA Life Insurance Advice Guide. This comprehensive resource can be accessed in the FPA Member Centre.
The final reform package will start on 1 July 2016. The Government has said that ASIC will undertake a review of the reforms in 2018, to assess whether the implemented measures are operating as proposed.