ASIC Uncertain All Direct Insurance Covered by LIF

ASIC has flagged it is not completely certain that a ban on commissions within the direct insurance space will immediately eliminate all forms of conflicted remuneration in that sector.

Commenting on a table of commissions, fees and payments in the life insurance industry supplied to the Parliamentary Joint Committee (PJC) Inquiry into Life Insurance recently, the regulator stated that many of the payments made for the sale of life insurance in the direct channel will be conflicted remuneration after 1 January 2018.

ASIC added that unless those payments were covered by an exception they would be banned, but it had no way of ascertaining which payments were likely to cease, even after the commencement of Life Insurance Framework in 2018.

“As yet, we do not have enough information to make an assessment. We will continue to monitor the industry…”

“As the Life Insurance Remuneration Act does not commence until 1 January 2018 we will not be able to determine whether the changes are effective in achieving the objective of better aligning the interests of consumers with those selling the life insurance for a number of years,” ASIC stated.

The regulator stated the direct channel had a number of distribution models and it was still assessing those methods through its current, ongoing work on direct sales of life insurance. As such, ASIC added it may find some models that were not captured by the new legislation and some that sought to bypass the reforms.

“The Government has asked ASIC to conduct a review of the reforms in 2021. We will be collecting data and conducting surveillances on advice, and have a current project on sales of life insurance through the direct channel – all this work will assist in establishing whether the reforms have been effective in achieving their objective,” ASIC stated.

“As yet, we do not have enough information to make an assessment. We will continue to monitor the industry, and consider what, if any, action might be appropriate if we identify any issues.”