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Government merges advice reviews

The federal government will fold the 2022 Life Insurance Framework Review into the Quality of Advice Review, taking over the responsibilities from ASIC.

The Quality of Advice Review will consider the LIF Review as part of its wider mandate, Minister for superannuation, financial services, the digital economy and women's economic security Jane Hume announced this morning.

Speaking at the annual Financial Services Council Life Insurance Summit, Hume highlighted areas that overlap across the two reviews that prompted the move.

Under Treasury's new remit, it will consider the breadth of issues impacting the quality and affordability of financial advice and risk advice, she said.

"This will mean that once ASIC finishes its data-collection phase, this information will be provided to Treasury for further analysis in the context of the Quality of Advice Review," Hume said.

Treasury will keep the issue of underinsurance and access to affordable advice front of mind in analysing the data.

Hume said the move will remove the duplication of work and save time for stakeholders by eliminating consultation times and submissions.

In early 2019, the Hayne Royal Commission recommended a review into the quality of advice in three years' time that should be conducted by ASIC.
The review should be completed by 30 June 2022, but no later than 31 December 2022, Hayne said, and look at areas like how effective regulation has been in improving the quality of advice and the safe harbour provision.

The LIF reforms commenced on 1 January 2018, which capped upfront commissions on life insurance products at 88% in the first year's premium. The three-year transitional period is due for a review in 2022.

Hume also flagged with confidence that the long-awaited Retirement Income Covenant will be in force from 1 July 2022.

"It is finally going to happen. The Retirement Income Covenant will be included in the SIS Act," she said.

Already, some "smart thinkers" are putting together products that cover insurance, annuities and market-linked pensions, that will help retirees smooth consumption between their working and retirement life, Hume added.

Read more: LIFASICQuality of Advice ReviewTreasuryLife Insurance FrameworkRetirement Income CovenantJane HumeRoyal CommissionFinancial Services CouncilLife Insurance SummitSIS Act