The introduction of the three-year clawback in the Life Insurance Framework will force many advisers to quit the industry, Sentry Group MD Murray Hills warns.

“I do strongly oppose the three-year responsibility period, because it will be a huge impost on life-based practices to carry,” he said.

“It will see many leave the industry, resulting in a vacuum of experience and knowledge that will adversely affect consumers in the long run. It is quite simply a contingent liability imposed on a business that many will find difficult to handle.”

Mr Hills says many poorly run practices will not survive beyond January, when the framework takes effect. Others will expand their advice pools.

“Neither… is a sustainable long-term scenario for the industry.” 

He says while life insurers call the framework a “watershed” for the industry, he wants them to match the restrictions imposed on advisers.

Products need three-year premium guarantees if the clawback is introduced, and insurers must stand by their products rather than increasing rates every year. 

Despite his concerns, Mr Hills remains optimistic for the industry, especially independent advisers. 

“Non-aligned advisers will continue to be regarded as the providers of strategic client-focused advice, whereas… those operating in vertically integrated institutional models will be viewed as product merchants.”

Dealer group Sentry will work with its advisers on the transition and lobby on their behalf.

“I will continue to meet with all adviser associations and encourage them to defend the rights of their members when they encounter special-interest groups that confuse turnover with profit,” Mr Hills said.