A number of Australian consumer groups have expressed their concern that the Trowbridge Interim Report into life insurance advice has failed to recommend the industry eliminate risk commissions.
In a joint submission to the Life Insurance Advice Working Group (LIAWG), the Consumer Action Law Centre, Financial Rights Legal Centre, CHOICE, and Maurice Blackburn have argued life insurance advisers could still be paid for the work they do without relying on commissions.
The submission notes that the LIAWG Interim Report, produced by independent chair, John Trowbridge, failed to propose a single remuneration model that wasn’t commission based. While acknowledging that the industry appears willing to take the learnings from Australian Securities and Investments Commission (ASIC) Report into Life Insurance Advice as an opportunity to create industry-wide change, the groups do not believe the Interim Report takes ASIC’s critique seriously enough.
The report … seems to accept without question that commissions are necessary to sell life insurance
‘The report accepts without any real discussion that remuneration which is not commission-based is not practical, and also seems to accept without question that commissions are necessary to sell life insurance. We do not accept either of those propositions, nor has any evidence been provided by the report to support them,’ the consumer advocates stated in their submission.
According to the groups, the challenge of moving away from commissions is a problem with the culture of advisers, not necessarily a problem with consumers.
‘We agree that life insurance is an important product, and that there is a role for advisers in helping consumers find the life insurance that suits their needs. We also agree that there are significant upfront costs in providing that advice and arranging insurance for consumers, and that advisers should be properly remunerated for their work.
‘However, we do not believe that commissions are necessarily a part of adviser remuneration, and indeed we think that commissions may create more costs than benefits for consumers.
‘While it is likely that people will be more reluctant to seek advice if they are confronted with the true cost than if it is hidden, this is by no means a bad thing. Properly disclosing the price of a product exposes traders (and industries) to competitive pressure and makes markets work better for everybody. The cost of advice only really presents a problem if it is actually unaffordable, such as if consumers are required to pay for it in a lump sum before receiving the product. This is not a hard problem to overcome, and is as simple as allowing consumers to pay for the advice in instalments over a long period, just as they do with other products they couldn’t afford upfront—cars, phones, and insurance itself. The fact is that consumers are already paying for life insurance advice through instalments now. The only difference we propose is to remove commissions from the picture and make the cost of that advice more transparent.’
…we think that commissions may create more costs than benefits for consumers
As an alternative to commissions, the joint submission recommends the final LIAWG report consider other options such as one-off fee for service and payment instalments. The groups have also called for an explanation as to why the commission-based options proposed in the Interim Report will better align adviser fees to the cost of providing advice and provide reasonable incentives for the provision of strategic advice.
“The industry’s response shows a lack of imagination, it hasn’t considered moving forward without commission-based sales. As long as there is a financial incentive for life insurance advisers to push certain products, there is little reason to think Australians will get advice that is prudent rather than profitable,” said Gerard Brody, CEO of Consumer Action Law Centre.
“Charging a fee for service is a much more transparent and ethical remuneration model. It would mean consumers will know how much they’re paying, and will allow them to shop around for the broker with the lowest fees.”
The submission also proposes the industry:
- Develop a code of practice for the insurance industry, in consultation with consumers and funded by the life insurance industry
- Develop a standard cover option to help simplify policies and the marketplace
- Consider the impact of Approved Product Lists and vertical integration on competition
- Adopt ASIC’s Life Insurance and Advice Checklist
- Test the effectiveness of Statements of Advice and improve disclosure where appropriate
- End stepped premiums which are being used to attract customers
Meanwhile, in a separate submission, Industry Super Australia (ISA) has claimed that, by failing to work towards the phasing out of conflicted remuneration in financial advice the LIAWG is failing to address the root cause of poor financial advice.
According to ISA, conflicted remuneration structures are the primary cause of poor advice in Australia, and feature in all the major advice scandals spanning the last decade. The super fund network believes that a transition towards phasing out commission-based remuneration is the only long-term sustainable solution compatible with a professional financial advice industry.
‘Commissions are more expensive than fee-for-service in relation to purchasing insurance products, and have persisted in large part as they serve the interests of the advisers rather than the interests of their clients,’ ISA said in its submission.
‘The conflict of interest created by commissions is primary. Secondary reforms in relation to disclosure, competency and training, will not effectively counteract this foundational conflict of interest.’
Like the joint consumer action groups, ISA has urged the LIAWG to consider remuneration arrangements that do not contain commissions. The submission also recommends an appropriate transition period for a move to nil-commissions would be 5-10 years.
Among the measures proposed by the ISA in its submission are:
- Flat or level commissions. This will effectively grandfather existing trail commissions, and by reducing new upfront commissions to appropriate levels will assist consumers in purchasing appropriate and durable insurance plans and avoid being churned by advisers incentivised by large upfront commissions.
- Capped commissions which are paid until the cost of advice has been ‘repaid’ and better reflects the level of advice provided. This will assist the commission structures wind down, while ensuring consumers are receiving greater value for money when purchasing an insurance product.
- A requirement for financial advisers to provide a strategic justification for advice prior to and separately from a product recommendation. This will assist advisers and advice dealerships move towards providing advice which is separate from product recommendations.
- An annual shadow shop review of insurance advice conducted by an independent body and funded by the industry. The purpose of an annual review is to track the progress of the industry during the transition period.
The LIAWG received more than 130 submissions from industry stakeholders (see: Trowbridge Praises Industry Engagement).
For more submissions, see:
I always wonder if any of these people have ever had to run a small business, successfully that is! I would love to hear a full submission from these people on how they propose to meet the “significant upfront costs” involved with risk advising.
Mr & Mrs Young’s risk insurance needs arrive at a monthly premium cost of $125.00. On my preferred hybrid model I may receive $845 first year and $260 renewal when I conduct my annual review. Assuming [an average range of] 10 to 15 hours of advisory time at a “modest” cost of $150 an hour + GST would require me to charge a “fee for service” between $1650 to $2475. And yes, removing the commission component reduces the monthly [amortised average commission cost to the insurer] premium by 25% per annum or $125 reduced to $95.67 [no commission is payable on the policy fee or frequency loading].
So, to save the innocent consumer from the “evil adviser’s commission” delivers a $360 a year premium reduction [assuming level premium rates and no indexation] whilst costing them around a $2000 first year fee and an ongoing fee of $330 [minimum 2 hours allocated each year], oh and do we charge them a fee for the 10 to 20 hours spent assisting our client went they claim?
Yes, I’d love to see their alternative to commission strategy that also genuinely covers the risk adviser’s business costs. Just like the life offices we have to be “profitable” to ensure we’re still there when our clients need us the most [as I have been for the past 28 years].
Regretfully, I will not be making any comment on the Consumer Groups joint submission, because I would be immediately arrested for defamation and using language not fit for publication!
Peter Hartnell, I had to laugh at your comments because I thought exactly the same thing. Phil, you are spot on with how we are expected to run our practices according to everyone else.
Is it at all possible that the people who put forward these views are the same people that own or are employed by firms that charge a percentage of the claimants “win” against WorkCover, TAC, “negligent Employers” and/or airline companies that have suffered an in-air disaster????? Talk about “”Self Interest””!!!! Legal firms advertising ‘No win – No Pay’ (but terms and conditions do apply!!!). Appealing to people’s greed that they maybe able to get more than they are entitled to. Again with self interest as the motive (because they want to earn a living and make a profit).
Who is paid first (without question or accountability) in the event of a company collapse?? The Liquidators.
Who pays out to families (and companies) when disability or death occurs? Hard working insurance companies pay out $millions thanks to us (advisers) doing a great job. Should we charge the client “”30%”” of the insurance payout when claim occurs?? Lawyers would.
I am so sick of ISA. Guys you are product providers!!!! You “clip the ticket” all the way through you process. You are the best example of vertical integration in the market, you aren’t a little bit conflicted, you are 100% conflicted. Yet you see fit to lecture and preach to the rest of us about how conflicted and evil we are. You are just trying to feather your own nest. You are quite frankly duplicitous!
Credit where credit is due though. Your marketing is BRILLIANT. You have manged to steal the moral high ground, paint yourselves as the savoir. But as with all false prophets, your day will come.
What and Industry Funds dont take a commission from the insurance companies offering cover to their members? ha! As a matter of fact on a time basis, i would expect that they should only need to collect a small fee for their time to implement cover for their members….. now how much do they actually get? millions? I would have though a couple thousand would seem a reasonable fee to for the fund to setup cover.
Whilst im at it, why dont we go after, Every other sales person in the workforce that get paid in commission, and also real estate agents, stock brokers, mortgage brokers, dentists, lawyers who get a percentage based payment from a settlement (commission), general insurance brokers, travel agents, the list goes on, but Risk Advisers are somehow the ones in the firing line.
The practical outcome of banning commissions is that consumers will make their choices based on advertising, not advice. While the commission based advice model may not be perfect, it is far better now than it was a few years ago, and is much better than advertising at providing consumers with affordable insurance appropriate to their circumstances. Insurance purchased by advertising (including in-super advertising) is far more likely to be the wrong type and amount of insurance for the client’s situation, and be full of fine print exclusions that make it difficult to claim. This will be a terrible outcome for consumers.
Anyone who thinks that consumers will make rational, well considerd decisions in their own best interests just as long as they have enough disclosure information about complex issues, is living in fantasy land. Less than 1% of the population does this. Commission based insurance advice, delivered by licensed advisers operating under a best interests duty, is the “nudge” approach needed to give the majority of consumers the best practical outcome.
I have a client who is in severe financial difficulty due to a former client of his taking legal advice and going in to liquidation. He wants to maintain his insurances and is juggling premiums every month. I am assisting him in managing premiums to keep his important insurances going, under the model proposed by the so called consumer advocates, I would have to charge him a fee, which he can’t afford to pay. Fortunately the commissions we receive go towards meeting our costs and the client is maintaining his much needed insurance. These people need to get out of their ivory towers and see how life really works out here in the suburbs.
While these consumer group comments may seem well intentioned they are both naïve and dangerous and of course there are underlying agendas that have nothing to do with consumer protection.
Inappropriate advice is not driven by commissions, it is driven by poorly educated advisers. The model proposed by theses groups will lead to manufacturers of products being the only suppliers of ‘Advice’ in the market and they will provide this ‘advice’ through their call centre sales team who will be unqualified and poorly trained. We already have corporate superannuation as an example of how poorly this will be delivered. There is no value for an adviser to work in that market as the employer does not want to pay anything and nor does the employee. Instead we have any number of small businesses with poorly structured and overly expensive ‘Employer superannuation’ funds that make a lot of money for the manufacturers – yes ISA that means you as well – but no one willing to review them as commercially they have no value.
I am yet to hear anyone providing details of how premiums will reduce by if these new models are introduced. Are advisers the only ones who are going to incur the costs of these new initiatives. If the above parties are serious about consumer protection why aren’t the asking for the premium reduction numbers?
We run a fee for service business accept for insurances because consumers wont pay for the necessary expertise to review their insurances if they end up uninsurable.
Industry statistics (CMLA Nov 2014) show only 16.6% of Australians have life insurance and the average is less than $100k of cover. Only 7.4% have income protection and only 2.7% have critical illness cover.
This is not caused by conflicted remuneration – in fact commission is the only reason we have achieved this relatively poor market penetration. General Insurances and Health Insurances also have built in commission structures and Health Insurance is compulsory? Why? Because consumers need to have the benefits explained to them before they will buy it. Insurance is a low priority when it comes to the household budget.
This model has been tried and tested in the UK and was a disaster – it would be nice if poorly informed consumer groups like the above, did some RESEARCH!
No commission = no advisers.
No advisers = a much larger underinsuance problem
A much larger insurance problem = a much larger dependence on the public purse ( that’s you the tax payer Mr consumer group in case you did not realise)
Wake up morons, no commissions was a dismal failure in the UK.
ISA’s opinion is more conflicted than any commission possibility.
Take away commissions and our business model will be to sack 7 of our 15 staff and service our existing book of clients only, forget about new business. Gee that actually means we make a lot more profit. That however does not fit our moral business model of helping people with a real need for advice. Young families, people withe debt, the single mum with a disabled child who I saw this week.
I’m going to start my Law degree this week, so I too can throw stones from glass houses.
I always understood the ISA long term goal was to eliminate independent advisers because they feed the big fund managers the super that rightly should go to ISA funds. And some of those super advisers may earn commissions on associated risk. So for commercial reasons,. the ISA says commissions on risk must go, having succeeded in having Shorten knock off commissions on investment. One down, one to go ! ISA can dress that up to their hearts content, but that’s the fact – ISA cannot handle competition
The ISA already know consumers will not pay fees for insurance advice from their albeit small experience with their associated ( and little used ) offering of fee based “financial Planners ”
The bit I struggle with is why lawyers, who either live in practice on 6 minute increment fees ( whether they do anything in that 6 minutes is immaterial ) or are on paid salaries, want to eliminate risk commissions as a proven system for insurers to bring in new business. Yes the lawyers in the consumer groups and the law research centres could be said to be left leaning, but they too have their snouts in the trough. Who pays Mr Brody’s salary-it costs heaps to run a think tank so someone must pay, with the attendant risk of confliction. Please be upfront Mr Brody.
Needless to say our “friends ” the insurers have not publicly given strong support to advisers to keep the current commission system. In their darkest moments they know that a Number 1 fund which stops receiving NEW BUSINESS is a fund which will implode with high claims and sky rocketing premiums. No profit there, at least not when it inevitably goes pear shape.
Part of the reason we are having this debate is that bankers now run insurance companies, not the old hands who understand that insurance is a long term business, not a short term shareholder driven grab for profits like a bank. Bankers see the debate, driven by the lawyers in ASIC for ideological reasons, and ASICs fellow travellers the ISA for commercial ( and maybe some ideal ology ) reasons as helping their short term profit strategy for their insurers.
Insurers know that no risk commissions, and the consequential; introduction of fees, MUST mean less risk business being submitted, and the inherent threat to the stability of the No 1 fund.
They also know their admin costs MUST increase without the free work done by advisers to keep business on the books and our role in keeping disgruntled claimants away from expensive lawyer driven claims. What client will pay $150 for the adviser to do the work to reinstate a lapsed policy. Why should advisers with no ongoing relationship with the client be bothered-no skin in the game !
But the bankers think the debate should go on just a little longer, to knock off upfronts and thus increase short term profits with compulsory hybrids.
Its a feudal system folks, and we are the taxed tenant farmers, or even the serfs. We do not have a seat at the table unless we revolt. Where’s the Magna Carta when you need it ?
“Part of the reason we are having this debate is that bankers now run insurance companies, not the old hands who understand that insurance is a long term business, not a short term shareholder driven grab for profits like a bank. ”
Exactly. There’s a big difference in underwriting a risk and feeding the quarterly reporting beast.
I’m curious if they’ve bothered modelling the impact on their profit of paying double the ongoing commission on their entire in-force book…
Banks, Industry Funds, Direct Insurance, Financial Planning (investment specialists) have no place in the review process. They are either bias or commenting from a perspective not relevant to the actual grinding work done by true insurance advisers at ground level!
Reading the above I can only ask: “Where is the working examples, from a wide range of circumstances, that proves removing commissions will make consumers better off? Where are the costings to back up their claims?”
Reality is that many people will not be able to pay an upfront fee to cover the cost of the advisers time for advice and product recommendation. In particular for the lower socioeconomic client who arguably needs the insurance most or the person who eventually is unable to get insurance or chooses not to take out the ‘amended’ terms.
Commissions spread risk – plain and simple. I may spend more time with a client that generates little commission and less time with a client that generates larger commission. Every case is different. But who can determine from the outset which one will be the greater work, exactly like who can determine which client will claim in future??
Has ISA reviewed some of the insurance premiums being charged to Industry Fund members? There are some good examples of premiums increasing by 50%-60% in the last 12-24 months. Quite often new clients with an industry fund can obtain better and more afforable cover outside of an Industry Fund and (shock horror) I am remunerated via a commission. So the client is miles better off, I do not need to charge them a fee, and they are dealing with a person they trust going forward for reviews/claims rather than a call centre. Has David Whitely ever tried assisting a client process a claim with an industry fund? – this is not something they specialise in, or allocate time and resources to, so it can take 6-12 months in many cases.
In my view this a bigger problem than conflicted remuneration and opposing priorities or reduced costs for consumers and maintenance of margins for risk advisers.
How can it be as simple as level vs upfront or coms vs ffs? It is not. Our standards of living would be improved if the under-insurance issue was addressed more effectively, so too would it improve if the overall cost of risk was reduced and supplied more productively.
Look at private health insurance, until legislation was enacted it was non-existent. To get the take up desired it has to be substantially subsidised by government with rebates and tax penalties, not to mention annual profitability and higher than CPI margin increases for product providers. This is their effective model and as whole our society is better off.
Should we not be looking at what distribution method is required to increase take up significantly? for example 150% tax incentives for high income earners and subsidised funding for low income earners? Are retirement savings really the best source of premium funding?
Can a model be created that allows for the consumer to have one single affordable monthly payment (best outcome for them) but ensures products are competitive, advice fees are competitive, government is providing appropriate incentives, everyone is paid appropriately at an appropriate time and unintended consequences don’t leave society as whole worse off?
I certainly don’t have the answer to that, but what I do know is that the current model of SoA’s and upfronts and the proposed model of level + fee for service, probably aren’t it.
Once again, the theoretical experts have jumped onto the bandwagon.
Gerard Brody and the ISN have their own agenda’s.
1. Gerard Brody to blow his own trumpet. He needs to take lessons, as he has nil knowledge and nil idea of what he is talking about on this subject.
2. The ISN want to feather their own nest, while providing terrible real world outcomes if people need to claim.
It seems all these lobby groups, self Interest groups, hangers on, or more appropriately named, leeches, are content to suck the blood of all and sundry, fill up, drop off and wait in hiding to latch on to the next victim, then repeat the process.
If Gerard Brody or the ISN bothered to ask the one group that actually matters, the people who pay the Insurance premiums to protect themselves and their families, then they might find the answer which we have known for decades.
Clients will not pay anywhere near the actual cost to provide advice, let alone sufficient for the adviser to draw $1 as income after paying expenses.
To be clear, it is too simplistic to ask clients if they would pay a fee.
They would need to clarify what part of the advice journey they are prepared to pay for, as we know there are many administration tasks and other area’s that would need to be categorised for billing purposes, which clients would be surprised and disturbed about paying for.
If there is to be clarity, we need to ask relevant questions that live in the real world, not some fanciful ideology that floats around in a inconsequential theory driven academics mind.
I am taking Peter Hartnell’s quality advice.
If I get started on this issue, there is no telling where it will end up!
Suffice it to say that I have never, ever seen such a deliberate and protracted attack from such a broad spectrum of groups toward an industry that in the main has delivered such value and much needed financial protection to Australians when they have needed it most and in many, many cases, would never have been available to the grieving families,the disabled,ill or injured had it not been for the ability of a quality financial adviser to paint a picture in the client’s mind so they were able to visualise, accept and act on a need they may not have initially realised they had.
Congratulations to all those respected financial advisers who have been there for their clients in need, are respected by their clients because they care and who effectively have saved governments 100’s of millions of dollars in benefit payments because people have been able to continue in a dignified and financially independent basis.
Commissions paid for high quality, compliant Risk Insurance advice in a clients best interest is not conflicted. The conflict lies within the people’s minds who think there is.
Who are these people? again someone who has nothing better to do? oh I see you get paid by the Government, legal aid so is that a fee for service ? or what? oh its government funding so you don’t need to worry until they decide to no longer fund you. Does the consumer know that the Vic government is funding you through borrowing. Did you research to UKs response when they ditched commission? oh is it constitutional for you or any government to dictate how you can earn a legitimate income? oh why not look at the legal world why not all lawyers no win no fee regardless. Why not limit the amount of fees a Lawyer can charge to lets say of $10,000.00 maximum any one case?. My advice has saved people from going into bankruptcy, liquidation and prevented divorce in may cases, I have taken people from $0000 to being able to retire, I have saved business from destruction, had claims paid you would never imagine, spent countless hours unpaid delivering excellence and you want to destroy that why?
David from ISA, your board consist almost 100% of industry fund directors and that is what you did, so conflicted remuneration? your only interest is increasing industry funds, of and you come from the ACTU what who has a conflict of interest? who pays you? Industry funds? Another leach of the industry opinion not worth it weight in anything.
ISA are self serving fabricators of truth. Their insurance offering is woeful at best, the levels are generally completely inadequate and the only people who will be hurt by this push is the underinsured claimant. This is a deliberate attack on advisers in an attempt to destroy competition, and not a peep from AFA or that other mob.
These consumer groups have very little understanding of the actual truth behind insurance advice and how it needs to be sold.
With direct insurers having around double the cost of cover AND 50% failure rate on claims, surely this is where these groups should be looking.
Sadly, I think IFA advisers need a union, because no one else gives a stuff about us.
The absolute best measure of success is looking at outcomes
In 30 years, when delivering cheques to widows and orphans, meeting my clients in hospital to facilitate their IP or Trauma claim.
Not once has there been a discussion about the commission.
Not once has there been an issue with the premiums paid.
Not once have I delivered an invoice for services in assisting with the claim.
I am AFAIK the only person that turns up with a cheque .
Everyone form the undertaker , bank and the ATO all want money.
Yet I am to be vilified by an industry super network, the ALP and other vested interests as being some kind of robber baron.
There is a culture of tear down vs build up that is pervading our society , as an adviser in Risk insurance, my costs are rising due to massive increases in compliance costs, insurances , dealer fees ( please tell me how that represents good value) and to top it all off, I am now told that not only will these costs continue to rise, my time spent on paperwork to further increase, but I need to do all is with downward pressure on income.
Can someone also explain how a fee for service module would work for someone that has no capacity to pay?
Using the example of how financial,planners work on fee for service is spurious.
Ask any CFP what they would charge for advice to someone with no money.
They don’t, their clients are people that already have money. and capacity to pay a fee.
A large proportion of my clients ( by the very nature of what I do) are people setting out in life, they have hopes, and aspirations, a job, but precious little else except large debt.
What is their best option ? Commission based advice, and a secure long term relationship with that adviser.
But what would I know after 30 years?
At the risk of repeating a past comment, sadly it’s fairly obvious that very few of those arguing for complete removal of insurance commissions have actually experienced good financial planning. Even if they have and paid for the advice they received, I doubt very much that they have considered their argument in the context of lower income (nonetheless aspiring early accumulator) households struggling financially with debt and dependent children. If offered the choice of a 30% premium reduction plus an invoice for the advice (and $1,500 would be cheap), or the option of premiums with in-built commission and no invoice, they will go for the latter. Surely that is CHOICE! Considering one of the groups arguing for the complete removal of the commission based remuneration model, I find this ironic!
As the solicitors are now adding their 10cents worth i would like to ask them how many of their clients pay in instalments ? In the “real world” when these buerocratic imbisils work out where that is clients are “flat out” paying for the insurance products let alone paying an additional $500 $700 $1000 on top as a fee for service. Those that are able too would be few and far between and those who want to would probably end up having to fund the fee over a 9,10 or 12 month funding period at say 11% ?? How is that assisting the consumer? Who is going to pick up the hours usually put in by the adviser at no additional cost to the client { OR THE INSURER} to assist with Claims, nomination of dependant changes { including addressing the complex issue of dependants for tax purposes etc in Super}. Direct debit authorisations fielding clients calls for information, stressing the importance of keeping a policy when the client has it in their mind to cancel. The list goes on and on.
We are not just being paid to put an application in and go on our merry way ! we have a service and a FUDICIARY DUTY to our clients which most advisers i know at least were doing it long before we were told it is mandatory and law. We generally care and have built up a repore with our clients over many years. Go to the bank and see if the Financial Services officer that you spoke to 12 months ago is still there ? probably now at a different branch and dont get me started on direct insurance what possible thought can go into a products assesment for a clients needs in 10 minutes over the phone ? and when it turns out to be not suitable hide behind some thinly vailed excuss ” It was general advice only.”
Wake up you morons and smell the flowers get out in the real world and see what people can and cannot afford the policies and why ! It all seems like a big pile of guesswork RATHER THAN ANY FACTUAL KNOWLEDGE.
Let me relate a story. A true story involving a girl, who’s funeral I am attending tomorrow. She had insurance in three places, all in ex-employer supers. One was with a large government employer (recent), one with a retail super fund (dormant) and the largest amount with a very large, well known Industry Fund (dormant). She was diagnosed with a terminal brain tumour. TI claims were lodged with all insurers. (BTW, there was, naturally, no one to assist her because covers were held by industry/employer funds, so I offered to help.)
All three insurers promptly approved the claim and sent it off to the trustee for sign off and payment. Two cheques arrived promptly. No word from the industry fund. After many weeks of simply no correspondence at all, even with us having full knowledge at this stage that the payment had physically been made to the trustees, we got a response along the lines of ‘there may be a problem’. We continued chasing them to eventually be told they wouldn’t be paying her because of some technicality of an employer of 10 years prior not advising them she had left their employ. They even admitted that it wasn’t her responsibility to do this but ‘rules are rules’. When it was pointed out that no such rule exists in the current, published mandate, they said they quoting from one from the time of her leaving the job – 10 years earlier. They couldn’t produce this wording, however, even though they assured us they would. This went on for months. We even engaged an insurance litigation solicitor who’s threat of legal action was simply ignored. Eventually, with the threat of the story appearing on a current affairs programme, they paid up. Absolutely disgusting behaviour! I have never experienced such a callous attitude. I came across countless similar stories from other advisers, however, during the time spent trying to resolve this. They robbed this girl of several months of the very limited time she had left, not to mention the extra stress they put her through.
And we are being lectured to by them about what is right! Put this in your next BS report you issue Whitely, I dare you!
The groups that are banging the drum for no commissions and fee for service will get neither. The Life insurance industry pays huge taxes to the Federal and State Governments.
When the Federal Treasury finally wakes up and realises what is proposed all of this nonsense will get rapidly dumped.
$1,000 million alone in stamp duty losses to State Governments.
If you think that the life insurance industry will be the same size year on year with no incentive to generate sales then your a lunatic. When the cashflows crash so will the industry.
The Life insurers will simply move offshore to Singapore and so avoid all of the consumer crap in terms of remuneration of advisers.
This type of policy died in a ditch in the UK and will here also.
Right at the moment the Federal Treasurer whomever it is will not put up with a $2bn loss to revenue and the States screaming for compensation all because some consumer group does not like commission and ASIC if full of left wing lawyers who hate the private sector.
This year the premiums for the Industry funds went up 40%. They will go up 40% for the whole of the sector with all of the costs this consumer nonsense adds to the product.
I await the outcome with interest.
Absolutely right Merv.
The loss of Federal and State taxes would be a major consideration not to introduce a level commission or fee for service .
They tried and banned commission in the UK and the results were catastrophic with huge job losses and the Industry on its knees. Commissions were re introduced because it is the only system that works.
The FSI(Financial Services Inquiry) is recommending level commissions of 30% to the Liberal government, which is a regressive step and is not going to work putting thousands of Advisers and Employees out of a job and an Industry in further turmoil.
If you want Upfront commissions and the choice of other commission structures to remain can I suggest you visit face to face with your local MP and put our case.
Good Luck!
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