The Association of Financial Advisers (AFA) has backed the Federal Government’s legislation limiting life insurance commissions.

But the association concedes it did not get everything it wants from the reform, despite lobbying on the latest version of the bill. A previous bill was lost amid the double-dissolution election.

“The AFA has worked diligently to achieve a level playing field across all channels of the life insurance market through the detailed drafting and consultation period,” CEO Brad Fox said.

“This bill does not give our members everything we thought was appropriate, but there are many other stakeholders the Government also needs to satisfy.”

He says a level playing field is the most crucial aspect.

“This bill will mean life insurance arranged through personal financial advice from an adviser and insurance bought directly through the weaker general advice channels will have the same remuneration and clawback provisions applied to them,” he said.

“Very importantly, we have succeeded in ensuring that business models where no advice at all is provided will also fall under the regime.”

Financial Services Council CEO Sally Loane has welcomed the bill’s reintroduction as part of sweeping reforms in the life insurance industry.

“It is important quality financial advice is not adversely affected by remuneration structures that can lead to poor consumer outcomes,” she said.

Mr Fox says the AFA will work with insurers towards a premium freeze for clients during the new clawback period. This will avoid significant premium increases on a policy’s first anniversary that make a switch of insurer compelling.

The Financial Planning Association has remained quiet on the bill, despite the Government praising its active role during negotiations.