In the wake of its current takeover bid for AXA, MLC has re-affirmed its position to retain commission-based remuneration on insurance products.
This confirmation was made by Steve Tucker, Group Executive, MLC & NAB Wealth.
Mr Tucker re-stated MLC’s well-known position on adviser remuneration (which calls for a move to fee for service) during a media briefing following the announcement of MLC’s bid for AXA.
However, Mr Tucker has since confirmed that MLC’s position on fee for service remuneration for advisers applies to superannuation and investment products only, and does not extend to risk products.
This is consistent with MLC’s submission to last year’s Ripoll Inquiry, in which it stated:
“MLC believes that it is appropriate for advice commission based remuneration models, with full disclosure requirements, to continue for insurance product distribution.”
Mr Tucker suggests there are significant differences between the structure and design of insurance and investment products, and that any future financial services regulation should account for these differences:
“It’s important that the industry works closely with government and regulators to ensure the differences between investment and insurance products are well understood,” said Mr Tucker.
MLC’s position on retaining commission-based remuneration for insurance products assumes full client disclosure and the company says that all volume-based payments should cease, irrespective of product type.
If MLC’s takeover offer for AXA Asia Pacific is successful, the combined entity will dominate the financial services market, holding the number one market share position in the following sectors:
- Retail Superannuation
- Retirement Income
- Retail Managed Funds
- Individual Risk
But the sector in which a combined NAB/MLC/Aviva/AXA would dwarf its rivals is Individual Risk, where market share charts published by NAB in its AXA acquisition documents indicate the combined entity would hold a greater market share than the combined total of the next two larget insurers (CBA/Colonial and ANZ/ING).
Adding AXA’s advice groups to its current stable of dealer groups, MLC advises this will account for 20% of the total number of all financial planners operating in Australia.
Meanwhile, AMP says it is considering its own position on AXA Asia Pacific, and that it has time to do so, noting it holds an exclusivity arrangement with AXA AP’s parent, AXA SA, until Friday 6 February 2010.
