Advisers lack allies in the fight for concessions from the Life Insurance Framework, Association of Financial Advisers (AFA) COO Phil Anderson says.

When the Future of Financial Advice reforms were proposed, a bid to change life components drew support from adviser associations, life insurers, the Financial Services Council (FSC) and the Coalition, he told an AFA roadshow in Melbourne last week.

“With the framework, we have been working with the Financial Planning Association, but we have the mainstream media, consumer groups, the FSC, life insurers and both sides of politics against us,” Mr Anderson said.

“But the outcome will be better than what was proposed in the Financial System Inquiry and the Trowbridge report.”

The Financial System Inquiry and Trowbridge recommended a remuneration structure that would not cover the cost of writing new business.

Mr Anderson says proposals in the framework support level commissions, and Assistant Treasurer Josh Frydenberg says it is not the Government’s intention to limit the life insurance advice industry’s ability to operate.

Mr Anderson says the industry should be allowed to set the rate for level commissions.

The AFA is also fighting the clawback proposal, because it seems to punish the adviser alone when a policy is moved.

He says there are issues around what is included in the commission figure if it must be paid back, and these include payments to advisers’ dealer groups and GST.

Mr Anderson says the Government has indicated it will look at approved product lists.

“We also want to have a say on codes of conduct and a review of statements of advice. But in the end, who will win from these proposals?

“We have seen no proof it will be the consumer, and we don’t want to see them being forced to use direct insurance. We know the costs are higher and the claims experience is worse.”

Complete Financial Balance GM Brendan Cox told the roadshow audience implementing the framework will produce a loss of $208 for every statement of advice.

His practice will lose $104,000 of revenue if it does not adapt to the proposed changes, he says. Profit will fall about 10%.