Most financial advisers oppose the Financial Services Council’s (FSC) proposed measures to prevent insurance “churn”, a Guardian Advice survey shows.

The survey asked advisers for their views on the FSC’s proposed measures on replacement business within the life industry.

Guardian EM Simon Harris says that while he applauds the FSC’s stance, he believes only a small number of advisers churn business.

However, he is concerned about the impact of this minority on the industry.

“We don’t want knee-jerk reactions affecting the many good advisers that have their clients’ interests at heart,” Mr Harris told insuranceNEWS.com.au.

He says the industry itself should drive change.

“We all want a sustainable and vibrant industry, but self-directed change is always better than governments and regulators dictating how it should be,” he said.

A total of 71% of survey respondents did not agree with the FSC’s definition of replacement business and 88% did not agree with the regulator’s proposal of five years as the “right timeframe” for replacement business.

Guardian advisers would prefer a two to three-year timeframe for replacement business, due to “trigger events” like marriage, birth of a child, a new job or extra debt.

“Clients’ circumstances aren’t always the same,” Mr Harris said. “We’re talking about individuals with their own specific personal circumstances.”

Advisers are also concerned about the FSC’s proposal to remove upfront commissions. It claims that level commissions on replacement policies are an “effective way” of addressing the issue of churn.

Also, about 79% of advisers did not agree with the proposal to increase the responsibility period to two years with associated clawbacks.

According to the FSC, “a clawback provision enables life insurance companies to recover some or all of the commission paid if a policy turns over early”.

The FSC plans to implement a framework by July 1 next year.