Speaking at a Financial Services Council/BT breakfast in Sydney yesterday, the assistant treasurer said appropriate reforms should be introduced “as soon as possible” by the industry itself, not by the government.
“The pressure is on the industry to [do so] quickly. I’m not saying many months – they don’t have months – I’m saying weeks, and maybe at most a couple of months,” Mr Frydenberg said.
The assistant treasurer warned the life industry not to force the “heavy hand of government” to act.
“Through the commissioning of the Trowbridge Report, it is encouraging to see industry taking responsibility for these issues and acknowledging that the status quo is no longer [appropriate],” Mr Frydenberg said.
While the Financial System Inquiry and the Trowbridge Report provide the government with a number of options for reform, “the extent to which we intervene will ultimately depend on the industry’s response”, he said.
“[John] Trowbridge’s recommendations around commission structures; ensuring approved product lists cover at least half of all [life] providers; a re-examination of the culture, behaviours and practices of advisers; and a life insurance code of practice are all deserving of further consideration,” Mr Frydenberg said.
“The government will be a willing reform partner with the industry, provided the industry is willing to adopt genuine solutions to the issues identified by ASIC’s report [into life insurance],” he said.
Mr Frydenberg stressed that his preference was for the industry, not the government, to come up with a solution when it came to adviser remuneration.
“Government can’t legislate a specific percentage level of remuneration for life insurance. We can’t be that prescriptive, we wouldn’t want to be that prescriptive,” he said, “and that is why I’m saying to industry now: get on with the job.
“As a matter of urgency, come to Government with your proposed changes. We will weigh that up against what ASIC, Trowbridge and the FSI have recommended and then we’ll make a decision,” he said.
“But give us something to work with by you taking the lead,” Mr Frydenberg said.
