May 23, 2018
Our latest poll asks you to reflect on ASIC’s open support for the complete removal of all life insurance commissions, and what this would mean to your business.
In a recent speech, ASIC’s new Chair, James Shipton, noted that the best way to deal with some conflicts was not to manage or disclose them, but to remove them altogether: “This is an option that ASIC favours in relation to conflicted payments in advice,” said Shipton (see: Removal of Commissions Would End Conflicts of Interest).
…the best way to deal with some conflicts was not to manage or disclose them, but to remove them altogether
Shipton’s comments were made in a current-day environment that is experiencing the transition period to a controlled 60/20 commission structure under the Life Insurance Framework reforms and the fallout from the Banking Royal Commission. In this environment, Riskinfo has spoken with a growing number of advisers who believe ‘the writing is on the wall’ when it comes to the future of commissions, and who will therefore not be surprised by these comments made by the ASIC Chair.
We asked you this same question in November 2012. At that time, the big issue was around the intention of the Accounting Professional and Ethical Standards (APES) Board to apply a blanket ban on accountants from receiving any form of life insurance commissions.
Back in 2012, advisers painted a gloomy picture of the future of their business if they weren’t able to be remunerated in all or in part, by commissions …and we wonder whether much has changed since then.
Certainly, there has been more debate over the last five-and-a-half years about the potential to charge fees for life insurance advice, and there are a number of advice businesses doing just that. However, while these business charge fees for elements of their advice processes and services (eg provision of Statements of Advice and/or charging fees for claims services) most still supplement those fees with commissions, both upfront and ongoing.
It’s over to you to have your say on this critical issue, which may have far-reaching consequences for many, and we’ll report back next week…