The industry superannuation sector does not believe proposals to shake up the framework of life insurance go far enough.
Assistant Treasurer Josh Frydenberg has taken on board recommendations made by the financial services industry to improve life insurance, a sector the corporate supervisor believes is dogged by bad advice and high commissions.
Mr Frydenberg believes the commissions charged for life insurance policies have not been in the best interests of consumers.
The proposals, which include limits to both upfront and continuing commissions, will be considered in the context of the government's response to the financial system inquiry chaired by former bank chief David Murray.
Treasurer Joe Hockey recently said a response to that inquiry was still a few months away.
An industry-commissioned review by the Australian Securities and Investments Commission recommended several measures designed to improve consumer outcomes, including a significant modification to upfront commissions.
But Industry Super Australia does not believe the proposals adequately tackle the serious problems exposed by ASIC.
Its director of public affairs, Matthew Linden, says they fail to address superannuation savings being drained by "extraordinarily costly" personal life polices that attract commissions.
Under the plan, the cost of life insurance policies will be cut and upfront commission rates reduced from 120 per cent of premiums to 60 per cent by 2018.
Consumer Action boss Gerard Brody said a proposed three-year review should be seen as an opportunity for further change - "not mission accomplished".
Financial Services Council head Sally Loane said the package included a new remuneration model, development of a code of conduct, more product choice and a review of statements of advice.
NAB Wealth group executive Andrew Hagger praised the leadership of Mr Frydenberg in what he described as a complex process.
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