The Australian Competition and Consumer Commission has released a draft determination stating that an application by insurers to restrict commissions was not in the best interest of consumers.
The ACCC made the statement after 16 general insurers had sought a 20% cap on commissions paid to distributors of ‘add-on’ insurances sold through motor vehicle dealerships.
In rejecting the application for a commission cap set by the insurers the ACCC stated it was not persuaded that the proposed conduct was likely to result in any significant public benefit. The ACCC also stated a commission cap would not reduce the price paid by consumers, nor improve the quality of policies and reduce the level of competition between insurers.
Life Insurance Direct Chief Executive, Russell Cain said the draft determination was important as it reflected a similar set of circumstances within the life insurance sector, with the exception that issues around commission in life insurance were determined by the Government.
“Legislation should improve competition, lower premiums and improve access to and the quality of advice. This draft determination indicates it may do the opposite,” Cain added.
Rate Detective Chief Executive, Damon Rasheed said the ACCC draft determination may not have an immediate impact on the implementation of LIF but should be considered in any reviews and assessments of its impact in the next few years.
“The legislation is done and dusted but this determination does have an impact on the issue of commissions and should be considered in the review set for 2021 and any further pressure to lower commissions.”
Rasheed acknowledged the ACCC would not be able to take any action on LIF because the matter was not officially referred under the ACCC’s authorisation process and “…the best we can hope for is for Chairman Rod Sims to make some public comments that might influence future policy”.
So why didn’t the AFA go to the ACCC two years ago ?
Where o where are the professional bodies the FPA and AFA?
This is the problem with their strategy of defending “public interest” (whatever that is)…..no one defends the interest of the advisers and the subsequent policy surprisingly reflects that…….unintended consequences
Neither the FPA or the AFA represent their “rank & file members.
The FPA got into bed with the ISA whilst the ISA were running a misleading and untruthful media add campaign against independent FPA advisers.
One former FPA Board member was so ignorant of this fact in WA that I sent her a copy of the latest ISA compare the pair advertisement.
Her reaction,…. not a flaming word !!
Weak leadership continues in both bodies, no matter who is at the head.
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