ASIC and the FSC are united in the view that the life risk sector needs reform, with the corporate regulator saying that it is “confident” the Life Insurance Framework (LIF) will ensure customers continue to have “trust and confidence” in the risk sector.
Following the federal government’s formal response to the Financial System Inquiry last month, FSC chief executive Sally Loane said the government’s decision to move forward to the LIF will “substantially benefit consumers”.
Now echoing this sentiment, ASIC said the reforms will achieve the objectives of ASIC Report 413 which called for an improvement in the quality of advice and better outcomes for consumers.
“We are focused on ensuring consumers have trust and confidence in the life insurance sector,” ASIC senior executive leader of corporate affairs Matthew Abbott said.
“Our report found the sector needs reform and the government has presented a reform plan which we are confident will deliver these benefits,” he said.
A number of advisers have highlighted their concerns about the effects a three-year clawback policy – as proposed within the framework – will have on their best interest duties as enforced by the FOFA legislation.
When this was put to ASIC, however, Mr Abbott referred to his previous comment in which he argued the reforms will benefit consumers.
Previously speaking to Risk Adviser, AFA chief executive Brad Fox refuted the claims made by Ms Loane, and argued that the Life Insurance Framework will lead to consumers paying more for advice.
“This increases the barriers to Australians getting the insurance cover that they need,” Mr Fox said.
A recent survey, conducted by a collective of advisers and dealer groups, found many believe the reforms will have negative effects for consumers and will also hinder their ability to service them in accordance with the FOFA legislation.