Minister Jane Hume
ASIC will no longer have the fate of the life insurance advice industry in its hands after the minister for financial services, superannuation and the digital economy, Jane Hume, announced the Life Insurance Framework (LIF) review will be rolled into the Quality of Advice review and handed over to Treasury.
Speaking at the Financial Services Council (FSC) Life Insurance Summit this morning, Hume said it was “silly” to have two separate reviews that could conceivably be combined into one.
“Accordingly, the government will ensure that rather than conducting two separate reviews… the Quality of Advice Review will now also consider the LIF as part of its wider mandate, removing the need for a separate LIF review,” Hume said.
Election timing could shape LIF outcomes
Election timing could shape LIF outcomes
Whichever party inherits control in the next federal election could carve the path for life insurance commissions for advisers.
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Philip Anderson, general manager of policy and professionalism at the AFA, has made the observation on a new episode of the wish you d known podcast, referring to the upcoming ASIC review into the Life Insurance Framework (LIF) reforms.
The regulator is set to collect a random sample of personal life insurance advice files later this year to compare advice after the implementation of LIF, against files it is currently reviewing from 2017. The results will be handed down next year.
Less than an hour after Labor’s Stephen Jones said insurance commissions were “a problem”, Liberal MP and ex-planner Bert van Manen called them a “perfectly valid form of remuneration”. Despite his endorsement, financial services minister Jane Hume says the government will also wait on the LIF review's findings before making a call on the issue.
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Life/risk advisers are going to have to make their case for the retention of commission-based remuneration in the same way that mortgage brokers did, according to the Federal Opposition.
The Shadow Minister for Financial Services, Stephen Jones, made clear that he remains to be convinced about commissions-based remuneration in the life insurance industry but acknowledged the case that had been made by mortgage brokers on the issue.
“Conflicted remuneration is a problem but mortgage brokers have been able to make a case for commissions,” he told an AIA Australia adviser summit.
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