The AFA has thrown its support behind government legislation introduced to Parliament today as part of a core pillar of its broader Life Insurance Framework reforms.
The AFA says it supports the government’s Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 introduced to the lower house.
The association said it contributed to an agreement in principle with Minister for Revenue and Financial Services Kelly O’Dwyer on a package of life insurance reforms in November 2015, and has worked diligently since then to achieve a level playing field across all channels of the life insurance market through the detailed drafting and consultation period.
AFA chief executive Brad Fox said that while the bill does not give its members everything they want, there are many other stakeholders the government needs to satisfy.
“On balance this bill, as part of the package of reforms that includes the Life Insurer Code of Practice, an ASIC-led Statement of Advice review project and regular reporting from insurers to ASIC on lapse rates, means that consumers can have more trust and confidence in life insurance,” Mr Fox said in statement.
The AFA also said it supported the bill’s commencement date of 1 January 2018.
“This commencement date means self-employed financial advisers have a little longer to prepare their business models for the significant reduction in upfront commissions,” Mr Fox said.
“It also means insurers have time to work with advisers to create efficiencies that will reduce the costs to provide advice to clients.
“Importantly, we succeeded in ensuring institutionally employed financial advisers will also come under the same framework earlier than would have been the case under the previous drafting of these reforms.”
Ms O'Dwyer said in a statement she reintroduced the legislation into Parliament to improve the quality of financial advice and boost consumer confidence in the life insurance sector.
"The bill addresses problems with remuneration practices leading to poor quality life insurance advice for consumers that have been highlighted in several independent reports including a 2014 ASIC Review of life insurance advice, the industry-initiated Trowbridge Review and the Financial System Inquiry," Ms O'Dwyer said.