Life Insurance and Advice Working Group (LIAWG) chair John Trowbridge has pointed to several key ways in which his report diverges from the FSC’s lobbying agenda.
Last week, InvestorDaily published sections of the FSC’s confidential submission to Mr Trowbridge's working group.
However, in response to the article, FSC chief executive Sally Loane defended the “independence and integrity” of the Trowbridge report process.
Speaking to InvestorDaily on Friday, Mr Trowbridge also rejected any suggestion there may be “collusion” between him and the FSC on the issues raised in the report – despite a number of overlapping policy recommendations.
Mr Trowbridge said there were three key issues on which the FSC submission and his own report diverge, including on the controversial issue of adviser remuneration.
First, the LIAWG chair and former APRA official said that while his proposal of an initial advice payment (IAP) payable to a financial adviser upon entry of a client into an insurance policy should be made available on a per customer basis, the FSC proposed a similar payment on a per policy basis.
“I’m saying: 'No, if you’ve got one policy and you take out another you can’t get another advice payment because the client is already insured’,” Mr Trowbridge explained.
“It’s aimed at the churning issue but also a customer focus so that both the insurer and the adviser are forced to focus on the customer’s total insurance needs rather than policy by policy.”
Second, Mr Trowbridge said that the FSC has “called for a longer clawback period” for adviser commissions, which would be advantageous to insurers and not advisers.
“That would mean that three years after a policy was put in place you may still have to give back some of that commission if the policy holder lapsed,” he said. “It is hard to administer clawback and it is very tough on the adviser.”
By contrast, the Trowbridge Report called for a one-year cap on clawbacks.
Third, Mr Trowbridge pointed to his recommendation to mandate a broad approved product list with a minimum of six insurance providers – a recommendation that is not evident in the FSC’s submission.
However, both the FSC and Mr Trowbridge called for a move to a level commission regime and a code of practice for insurers.
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