The Government has advised it will not proceed with its proposed change to the conflicted remuneration rules for insurance inside superannuation until it has conducted a broader consultation with the insurance industry.
As part of its program of amendments to the FoFA regime, the Government proposed to lift the ban for risk products within superannuation where personal financial advice is provided. This would mean that only automatically provided group-risk insurance within default superannuation funds (including MySuper) would be commission-free.
However, the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014, introduced into Parliament this week, contains no reference to the removal of the ban on commissions for certain types of insurance in superannuation products.
Tabling the Bill in the House of Representatives, Parliamentary Secretary to the Treasurer, Steven Ciobo, explained that the Government would not proceed with any changes that impact on the life insurance industry.
…certain business lines within the industry are currently facing a number of challenges
“Through consultation on the proposed amendments and broader industry engagement, the Government became aware that, while the industry as a whole is well capitalised and profitable, certain business lines within the industry are currently facing a number of challenges, which is raising concerns about the sustainability of some existing industry practices,” Mr Ciobo said.
“In light of these concerns, the government will undertake a separate process to engage with the life insurance industry on a broad range of issues affecting the sector.
“In order to ensure that the industry’s regulatory environment is not subject to further change while this process is underway, the government does not propose to progress any legislative amendments in this space at this time.”
The Government has previously expressed its interest in the insurance industry and the challenges being faced by insurers and superannuation funds. Earlier this year, Assistant Treasurer, Senator Arthur Sinodinos, said that he had asked Treasury to develop a consultation process with the life insurance industry to discuss the issues, including sustainability, facing the Australian market (see: Sinodinos Targets Life Insurance Industry).
No further information on the progress of the consultation has been made available at this time.
For more on the FoFA amendments legislation tabled in Parliament this week, click here…
…And click here to find out how the industry has reacted to the changes to the legislation.
