March 25, 2019
The Federal Opposition has reaffirmed its intention to completely ban risk commissions, pending the outcome of ASIC’s 2021 review of the impact of the Life Insurance Framework reforms.
Confirmation of Labor’s position came by way of Matt Thistlethwaite, MP, Shadow Assistant Minister for Treasury, who was speaking as a panellist at a plenary session at last week’s FSC Life Insurance Conference in Sydney.
Under the umbrella of a discussion addressing how the financial services and life insurance sectors can rebuild public trust following the fallout from the Banking Royal Commission, the Shadow Assistant Minister reiterated the position previously adopted by Labor, namely that it will ensure that ASIC, in its 2021 review, considers whether there is any clear justification for retaining risk commissions (see: Labor May Ban All Risk Commissions).
The Labor position differs from that of the present Government in two ways
The Labor position differs from that of the present Government in two ways. First, it says it will ensure ASIC, in its 2021 review, considers whether a clear justification exists for retaining risk commissions, whereas the Coalition’s focus will be on whether ASIC identifies whether there has been a significant improvement in the quality of advice.
The second difference is in the action each Party will adopt if ASIC finds (for a Labor Government) that no clear justification exists for retaining commissions or (for a Coalition Government) that there has been no significant improvement in the quality of advice. Labor states it will ban life insurance commission all together – confirmed last week by the Assistant Minister Thistlethwaite at the FSC Life Insurance Conference – while the Coalition will move to mandate a level commission regime, in line with the recommendation made by David Murray’s Financial System Inquiry in 2014 (see: Ban Upfront Commissions – FSI).