The AFA and FPA believe the Life Insurance Framework (LIF) legislation will likely come under review should Labor win the federal election on Saturday.
Labor responded to the introduction of LIF legislation in March by saying that, while it will help consumer outcomes, the bill is “not perfect”.
“It is my view that although these changes are worthy of our support, we should consider them as a step in the right direction and not the arrival at a final destination,” said shadow minister for financial services and superannuation Jim Chalmers.
“We strongly believe that the new framework must be monitored following implementation to establish whether it is working, or whether more needs to be done.”
FPA chief executive Dante De Gori said that if Labor wins the election and there is a change of government, then the party will want to look at the LIF from its own perspective.
“[Labor] are on record saying that they don’t believe it goes far enough,” Mr De Gori said.
“The remuneration structure changes that the Life Insurance Framework [proposes] are not strong enough, and this is something the industry should be aware of, but a Labor government will probably be looking at a process of looking to eliminate all insurance commissions, if not drastically reduce them further than what’s been proposed.”
AFA president Deborah Kent said that the LIF reforms had bipartisan support prior to the election, but Labor may decide to revise the reforms if it wins.
“We know that Labor was supportive of the reforms, but they did indicate that they didn’t go far enough, so we would have a concern around whether Labor would actually review the reforms, and it may not be as palatable as the current reforms that we’ve got at the moment,” Ms Kent said.
The Senate Economics Legislation Committee recommended in March that the LIF legislation should be passed without any changes, saying it believes “the bill contains provisions designed to ensure that consumers can access unbiased and appropriate advice” on life insurance.
“This bill effectively addresses unnecessary churning and will ensure that ASIC has greater regulatory oversight over the industry,” the report said.