Banning upfront life insurance commissions will not stop the behaviour of “unscrupulous advisers”, argues the Boutique Financial Planners (BFP) group.
Responding to an ASIC report that found 37 per cent of life insurance advice was 'inadequate', BFP president Dacian Moses said it was “poorly resolved conflicts” that must be addressed rather than simply the remuneration structure in isolation.
“The BFP acknowledges that this latest ASIC report is further indication that consumers in Australia are still not getting the advice they deserve,” Mr Moses said.
“The motivation and conduct of unscrupulous advisers is consistent in rewarding themselves at the expense of the client.
“This behaviour would not change if upfront commissions were banned,” he said.
It is not clear from ASIC’s review of the life insurance industry how many advisers in the sample were “subject to the FPA code of practice”, he added.
“The FPA Code represents the best assurance a consumer can get that their adviser's conduct and motivation is aligned with the consumer’s best interest,” Mr Moses said.
“While the BFP is unaware of any members being the subject of adverse findings, we can say that all of our members are AFS licensees focused on holistic financial planning, which often includes ‘strategic life insurance advice’ as recommended by ASIC in its report."