The life insurance industry risks feeling the “heavy hand” of the Government if it refuses to take the initiative on urgently needed reforms.

“Appropriate reform, made as soon as possible, must be led by the industry itself,” Assistant Treasurer Josh Frydenberg told a Financial Services Council event in Sydney last week.

“Industry should not force the heavy hand of government to act.”

Mr Frydenberg’s ultimatum follows the release last month of the industry-commissioned Trowbridge report, which made several recommendations to improve the sector.

The proposals include introduction of a life industry code of practice, re-examination of advisers’ culture, behaviour and practices, and changes to approved product lists.

The Trowbridge review follows the Australian Securities and Investments Commission’s (ASIC) report on retail life advice last October.

“The Government will be a willing reform partner with the industry, provided the industry is prepared to adopt genuine solutions to issues identified in ASIC’s report,” Mr Frydenberg said.