September 26, 2018
The Banking Royal Commission has questioned why life insurance commissions should remain as a carve-out to the conflicted remuneration provisions of the Corporations Act and why they should not continue to be reduced to zero.
The Commission posed the questions as a ‘policy related issue’ arising from the insurance hearings which concluded last week, and included them in a document released through its website, which is open for comment until 25 October.
Under a section titled ‘Sales’, the documents stated, “Should monetary benefits given in relation to life risk insurance products remain exempt from the ban on conflicted remuneration in Division 4 of Part 7.7A of the Corporations Act 2001 (Cth)?”. The document also asked, “Why shouldn’t the cap on such benefits continue to reduce to zero?”
“Why shouldn’t the cap on such benefits continue to reduce to zero?”
Further questions asked if the ban on conflicted remuneration was sufficient to ensure that ‘sales representatives’ do not use inappropriate sales tactics when selling financial products, and if other changes, such as further restrictions on remuneration or incentive structures, were necessary?
The sale of direct life insurance was also questioned with the policy issues document stating, “Should the direct sale of insurance via outbound telephone calls be banned?”, adding, “If not, is the current regulatory regime governing the direct sale of insurance via outbound telephone calls adequate to avoid consumer detriment?”.
Claims handling procedures were also considered with the document querying whether ASIC should have jurisdiction over the handling and settlement of insurance claims, and should life insurers be prevented from denying claims based on pre-existing conditions that are unrelated to the claim?
Submissions regarding the policy document and the round six hearings related to insurance can be made via the Royal Commission’s website.