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Stephen Jones admits to anti-life insurance bias

At the Association of Financial Advisers annual conference, shadow minister for financial services Stephen Jones outlined Labor's vision for financial advice and admitted to apprehension on life insurance.

Jones said, referring to the ASIC review of the life insurance industry that is currently ongoing, that he is going in to any work involving the life insurance industry with a negative bias towards its relationship with financial advice.

"I start with a bias against it, I have to say. I think the burden lies upon the industry at large to prove that a commission based sales model attached to an advice sector can provide advice that is not conflicted," Jones said.

"I want to be very frank. I don't want to leave anyone in any doubt of where I come into that conversation."

Jones was clear that while Labor is supportive of the financial advice industry, it wants to see advice completely decoupled from product sales and commissions (in line with the Royal Commission's recommendations).

"The old business model based on commission-based sales... is gone, it's not coming back," he said.

Jones drew on his experience as a lawyer when discussing pricing models that could replace the commission model. He said that if financial advisers could successfully communicate their value proposition as lawyers have done, people may pay fees in a similar manner.

One question from the audience, however, pointed out that the average Australian can't afford legal fees either.

Jones replied to this that wealthy Australians will continue to be able to afford advice and that those in financial crisis could be assisted by government initiatives to provide access to financial counselling.

But, it's those in the middle the industry must really work to develop an innovative business model to capture.

"Nobody likes paying legal fees or their accountant fees or tax agent fees or anything, but they do," Jones said.

During Jones' speech, he said that Labor wants to see a financial advice sector that caters to middle income earners - particularly as Australians are currently retiring with more retirement savings than ever before.

"Over the last 12 months, since I've seen you last, we've had a mass exodus from the industry," Jones said.

"All of these challenges made all the more difficult by the way the government is handling, or I would say mishandling, the professional qualification process under FASEA."

He slammed FASEA again during his speech, saying the way the organisation has gone through two chief executives within its first two years of operation shows "something is very wrong".

"We're in the first recession in 30 years and the deepest downturn since the 1930s," Jones said.

"Access to quality advice for households and businesses is going to be absolutely critical."

Jones was also not overly positive about the government's recent federal budget and plans for getting through the COVID-19 recession.

He said he is disappointed to see the government "dismantling things that have been working" but he does support the tax cuts and funding for business that were announced in the budget.

"You'd expect that if we are going to see a deficit of that size there would be some overarching vision," Jones said.

"There was no clear overarching strategy, no clear overarching vision for how the government sees Australia getting out of this."

Again, Jones called for the government to release the findings of the retirement income review - which he said has been sitting with the government for two months unreleased.

Read more: Stephen JonesAssociation of Financial AdvisersFASEARoyal Commission
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