With the life insurance reforms creating uncertainty for advisers, the AFA is lobbying the government to consider the future implications for the industry.
AFA chief executive Brad Fox said the association has been discussing the main concerns that advisers have with the Life Insurance Framework (LIF) – especially with regard to the three-year clawback period – with federal Liberal MP Bert van Manen, and it will soon take these concerns to Assistant Treasurer and Minister for Small Business Kelly O’Dwyer.
“It is important that government appreciates that shifting of responsibility from the institution to the adviser threatens the future of advisers that own or are employed in small business advice practices,” Mr Fox said.
“It also risks worsening the $1.6 billion annual cost to government caused by underinsurance if there are fewer advisers."
In a previous interview with Risk Adviser, Mr van Manen – who also chairs a backbench policy review committee on all matters relating to small businesses – said the industry reforms are “not set in stone” and definitely have room to move.
“This is the time for feedback and for the industry to apply pressure,” Mr van Manen said.
“I appreciate [advisers’ concerns] and I think [the reforms] have the potential to significantly affect the capacity of businesses to grow over time and to make [the industry] attractive to new entrants.”
The AFA said the LIF has placed too much focus on adviser remuneration and not enough attention on creating a long-term solution that can deliver a positive vision for more Australians to have the financial security provided by risk insurance.
“The current framework may deal with some of the public perceptions around commissions, but it doesn’t offer a true win for the public or the common good,” Mr Fox said.
“Strong undertakings have already been made across the industry with regard to raising minimum training and education standards for financial advisers which will deal with the compliance and reputation concerns of ASIC and government,” he said.
In discussions to be held with Ms O’Dwyer, the AFA will be asking the Assistant Treasurer and Small Business Minister to support some improvements in the insurance reforms, starting with the clawback period.
The association will also seek to gain support from Ms O'Dwyer for the industry to develop a vision for the future of life insurance for the good of the Australian community.
“With this support, a far better vision for life insurance can be delivered,” Mr Fox said.