The Financial Services Council's (FSC's) decision to pull its application to the Australian Competition and Consumer Commission (ACCC) on churn has received the backing of risk-focused dealer group Synchron.
The group's director Don Trapnell yesterday reiterated his negative stance on the FSC churn policy, saying that in an industry driven by statistics and common sense, it "simply didn't stack up" and was uncompetitive.
"The FSC in particular, and the life insurance industry in general, simply could not provide the statistical evidence ... that a systemic culture of 'churning' exist[ed] amongst advisers," he said.
"Synchron is very proud to have rallied in defence of advisers and led the debate challenging the FSC's view of the world."
According to Mr Trapnell, Synchron is committed to seeking new models for adviser remuneration as long as it was not at the expense of advisers' business and was driven by competitive forces.
Moreover, the group would back life insurance companies if they built products on the premise of the belief that longer responsibility periods would result in savings to the end consumer.
"It was competitive forces that introduced a one-year adviser responsibility period in the past and it should be competitive forces that reshape responsibility periods in the future," he said.
"It has taken some time, but at last common sense has prevailed," he said.
Late yesterday, the FSC's chief executive, John Brogden, said that while the council had determined to proceed with an application to the ACCC to approve the proposed FSC framework late last year on the basis of consultation - with industry bodies, regulators, consumer groups and the government - the FSC "no longer [had] unanimity on this approach" and therefore had decided to not proceed.
"The proposed framework raised a complex set of factual, legal and economic issues from a competition perspective which meant that it would have required regulatory approval in order to be implemented. There was no guarantee that such approval would be obtained," he said.
