Several product manufacturers have conceded that the problems of “misaligned incentives” outlined in the Trowbridge report are of their own creation, and that they need to be actively involved in finding a solution.
Speaking at the FSC Life Insurance Conference – following the release of LIAWG independent chairman John Trowbridge’s report – Suncorp Life chief executive Geoff Summerhayes conceded that product manufacturers have a responsibility to fix remuneration structures.
“There are absolutely differences of opinion, but the manufacturers have created this situation in terms of our remuneration structures and I think the manufacturers absolutely accept that it is also our position to solve that,” Mr Summerhayes said.
“That is having consequences right down the value chain, but the payments are made out of manufacturers and it is up to the manufacturers to face into that and [remove] that misalignment.”
Also speaking at the conference, ANZ Global Wealth managing director of insurance Alexis George said the report was a “watershed” for the industry.
“We have a stake in the ground right now, and I think as an industry we need to be responsible and move forward,” Ms George said.
“Certainly we have to consider implications. We have to consider the economics for the industry as a whole, for our advisers, for our customers and for the insurance manufacturers … and understand the implications of certain decisions.
“We have an expectation not just from the regulator, not just from the government but from customers that we are going to move forward and I think [we should] embrace that challenge,” she said.
In a statement from the Commonwealth Bank responding to the report, group executive for wealth management Annabel Spring said it is “critical” that both life insurers and advisers work to implement “sustainable remuneration structures”.
“We are carefully reviewing the report to understand and consider the implications of the recommendations for our customers, advisers and our businesses,” Ms Spring said.