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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.”

  • Adam p

    Isn’t that wonderful, the whole LIF con job gets better and better.
    We all know LIF was aimed at squeezing advisers out so the institutions can Flog more rubbish direct insurance.
    Now ASIC admit that they will let direct insurance slip through the conflicted remuneration cracks.
    ASIC you are owned and run round the circus by the Banks and Life companies.
    ODwyer, great job supporting your institutional buddies.

  • Ken

    It was good enough to assume that the remuneration model ( commission ) applying to independent ( there’s that word again) advisers was the root of all evil in the industry and reducing or eliminating it would work wonders in getting the respect of the community and keep the industry going forward
    But !! Apparently this does not apply to direct sales !! Based on what according to the article the legislation has not commenced so we don’t know how it will effect things ??
    Isn’t that great ! It was god enough to have s guess based on some outrageous findings from a couple of “ stewed up” reports putting many advisers out of business and deterring others from commencing a career in it but let’s see what happens before we make it universal
    My god what s bunch of single celled Omeba we have running this department I trust the PJC can see through this blantant coverup for the banks and bank aligned insurers
    Maybe we do need a Royal Commission into the banks ??
    Heaven knows what they could find ???

  • NobbyK

    Little wonder that a banking investigation is being fought off and dismissed.

  • emkay

    ASIC has a level of incompetence rarely seen. Too bad I have to personally fund these fools from next year, I wonder if I can claw back my fees?
    LIF was and remains a con job that O’Dwyer’s complete lack of any understanding of the industry got her led by the nose to where the banks and insurers wanted her to go.
    Direct insurance costs approximately double proper insurance costs, why? No advice, no compliance costs just a free for all for insurers! Too bad the consumer will be worse off under the direction we are heading.

  • Paul

    What a debacle this is turning out to be…. Hail Mary legislation! lets change the rules and see what happens. Bring on the Royal Commission!. Forget about the consumer having no confidence in the industry , what about the earn a living from it. Where is the AFA and FPA in all this? Standing up and fighting for the rights of their paying members…… oh that’s right we better be quiet otherwise we will lose our seat at the table and losing the Power that we do have.