Treasury appears to be consolidating its oversight of the future advice reform agenda, with Senator Jane Hume explaining it will assume responsibilities for the Life Insurance Framework review which was previously being conducted by ASIC.
Speaking at a Financial Services Council conference, Hume referred to the draft legislation around the single disciplinary body for financial advisers, saying that Treasury’s goal is to “make sure we have alignment in the work we’re doing”.
Because of this, she explained, it would be “silly” for ASIC to be simultaneously reviewing the LIF and the affordability of advice, given that there will end up being “so much overlap”. She added that the data collection ASIC has already conducted for the review will now be passed onto (and analysed by) Treasury.
“As we undertake the quality of advice review,” Hume said, “important issues like the degree of underinsurance and maintaining access to affordable, quality advice will be at the forefront of our minds.”
Last year, we discussed Key Person Risk Management director Brett Wright’s concerns regarding ASIC’s LIF review. At the time, he argued that contrary to popular sentiment, “consumers generally prefer the process of applying, renewing and claiming under a commission/brokerage model. He says this is because “life insurance is complex, confusing and people don’t wake up in the morning thinking about why they need to buy it.”
“Life insurance advisers,” he added, “cut through consumer apathy and are able to do this by making the process seamless for the consumer, often collaborating with other professionals such as accountants, and willingly providing advice and services without consumers needing to worry about being charged thousands of dollars in upfront and ongoing fees on top of their insurance premiums.”
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