Lobby group petition urges LIF change review

21-Dec-2015

By Kristen Crawford

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A number of life insurance advisers have joined forces to form a lobby group that is urging the Senate to review legislative changes set to take place as part of the life insurance framework (LIF).

The Life Insurance Consumer Group (LICG), formed in November, had reached well in excess of 1650 signatures on its petition in its first week seeking support from advisers.

The group has urged as many advisers as possible to access the petition online at licg.com.au, saying it might be the only chance to voice their disagreement before the proposed LIF legislation was put before the Senate on 4 January 2016.

Speaking on behalf of the group, NOW Financial Group director Mark Dunsford said the proposals had not been given enough thought and consumers would not win as a result, because the laws as they stood would lead to further underinsurance.

“There is no doubt both the AFA [Association of Financial Advisers] and FPA were bullied into coming to that conclusion, and [Assistant Treasurer] Kelly O’Dwyer recognises that the decision was made before her time,” he said.

“[Associations] were told that if you don’t take this, you’re potentially going to have 20 per cent level commission across the board.”

The sheer number of advisers who had already signed the petition showed advisers around the country were not happy at the way the legislative process had been researched and presented, or the way the argument had been framed, Dunsford said.

“It makes advisers look bad and that is probably the part that hurts the most,” he said.

“At no point have there been and banks or insurance companies saying that ‘Hey, generally you guys do great,’ rather it has all been about pointing the finger rather than considering the facts.”

For example, Plan for Life’s “Analysis of the Direct Insurance Market,” released in July 2013, found that on average nearly 40 per cent of policies purchased directly lapsed in the first year.

In contrast, adviser-based business averaged lapses of 8.4 per cent in the first year after sale.

“The decisions made seem to have been done without consideration of any proof or concrete data”, Dunsford said.

“Rather, it has been about increasing shareholder profits and nothing to do with benefiting customers or looking after small businesses that have looked after the finances and wellbeing of thousands of Australians.”

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