New Life Insurance Framework Announced


A maximum 60 per cent hybrid commission structure headlines a package of life insurance remuneration and other reform proposals announced by Assistant Treasurer, Josh Frydenberg.

Assistant Treasurer, Josh Frydenberg
Assistant Treasurer, Josh Frydenberg

The 14-point Life Insurance Framework released by Mr Frydenberg follows a controversial and sometimes emotional debate surrounding the release of ASIC’s Review of Retail Life Insurance Advice (ASIC Report 413) in October 2014, and the subsequent recommendations handed down by John Trowbridge earlier this year, in response to Report 413.

The Framework proposes a 14-point plan that covers :

  • Adviser and licensee remuneration
  • Transitional arrangements
  • Quality of advice and insurer practices
  • Better enforcement and monitoring
  • Industry efficiency

Adviser and licensee remuneration

Five points in the proposed framework address the most controversial issue in the debate, namely adviser and licensee remuneration. These proposals appear to represent a compromise solution that is positioned between current upfront commission arrangements and the flat commission structure proposed within the Trowbridge recommendations:

  • Maximum total upfront commission of 60 per cent of the premium in the first year of the policy, from 1 July 2018
  • Maximum ongoing commission of 20 per cent of the premium in all subsequent years from 1 January 2016
  • Three year retention (‘clawback’) period, to commence from 1 January 2016 to apply as follows:
    • in the first year of the policy, to 100 per cent of the commission on the first year’s premium
    • in the second year of the policy, to 60 per cent of the commission on the first year’s premium
    • in the third year of the policy, to 30 per cent of the commission on the first year’s premium
  • Ban on other volume-based payments from 1 July 2016, with appropriate grandfathering arrangements, consistent with the Future of Financial Advice laws
  • Life insurance companies to offer fee-for-service insurance products to support advisers who wish to operate on a fee-for-service basis

Transitional arrangements

A three-year transition structure has been proposed, which would culminate in the 60 per cent maximum upfront commission structure being implemented from 1 July 2018:

  • Maximum total upfront commission of 80 per cent of the premium in the first year of the policy from 1 January 2016
  • Maximum total upfront commission of 70 per cent of the premium in the first year of the policy from 1 July 2017
  • Maximum total upfront commission of 60 per cent of the premium in the first year of the policy from 1 July 2018

Quality of advice and insurer practices

These two points reflect previous recommendations supported by many parts of the industry, including the AFA and the FSC, and which were included in the Trowbridge recommendations:

  • Government to consider measures to widen Approved Product Lists by 1 July 2016
  • Life Insurance Code of Conduct to be developed by the FSC by 1 July 2016. Similar to existing codes for Banking and General Insurance, the Code would set out best practice standards for insurers, including in relation to underwriting and claims management.

Better enforcement and monitoring

  • Ongoing reporting by life insurance companies of policy replacement data to ASIC to commence 1 January 2016
  • Government to conduct a review of these measures by the end of 2018

Industry efficiency

  • ASIC to review Statements of Advice, with a view to making disclosure simpler and more effective
  • Government to consider developing a mechanism to rationalise life insurance legacy products, consistent with recommendation 43 of the Financial System Inquiry

AFA Response

The Association of Financial Advisers has delivered a detailed initial response to the proposed Life Insurance Framework, noting it is ‘generally’ supportive of the proposal endorsed by the Assistant Treasurer.

the final position …represents a compromise

It says the Framework is the industry’s response to ASIC Report 413 and that the final position “… represents a compromise that, whilst challenging, is at least workable for most advisers…”

AFA CEO, Brad Fox said, “It is unfortunate that much of this debate has been about adviser remuneration, when the real issue and the thing that needed to be addressed was always the quality of advice and compliance.” He added, “Our intention in this process was always to find a united industry solution.”

Mr Fox said the AFA wanted to move forward with a remuneration outcome based on an 80/20 hybrid commission model, “…however it has been made clear to us that this is not something the community will now accept for the long term.”

The AFA notes it has worked in collaboration with the Financial Planning Association to reach a shared blueprint of recommendations that in themselves represented fundamental change on many levels.

The AFA also highlighted five areas in which it said it was particularly pleased to have secured:

  1. The three-year transition period
  2. Clawback arrangements that taper down appropriately
  3. Retention of greater payment in year one (when the costs of providing the advice are highest)
  4. Commitment from the insurers to improve efficiencies
  5. Government support for ASIC to address the cost of providing advice through more efficient and effective advice document requirements

Mr Fox concluded, “High upfront commissions of over 100% in the first year, together with insurer conduct that encourages the switching of clients’ policies, have created conflicts of interest. In the simplest terms, the public, consumer groups and politicians have made it clear that this must stop. These measures ensure that it will.”


  1. So tell me how does the three year ‘ claw back’ period deter another adviser from replacing business i have written ? Where i cop the penalty for their ( possible) unethical conduct.

    • I think some clarity needs to be provided around this. Similar situation could be when another Adviser simply changes servicing rights to a policy, does the original Adviser get a claw back for doing all the work in the first place? What if a client had a claim in the first 3 years? Is this a claw back? Hopefully some clarity around these specific circumstances.

    • Couldn’t agree more Stephen. The proposal only stops churning what you’ve written yourself.

    • I would like to see the 3 year clawback for all financial planning advice – including the fee for advice plus platform revenue received. That would make it interesting!

    • Totally agree. These measures will not address any unethical behaviour by fellow planners. All it will do is deter planners from providing clients with personal insurance advice because the commercial risk is too great for planners to harbor.

      When will the regulators and associations start to take a commercial perspective on this issue….

    • I agree Steve. Not that we have much business transfer to another adviser but if it does then that adviser should pick up the responsibility. I understand Comminsure do this.

      • What about the old insurance company tactic of enticing new business with cheap premiums yr1 then the renewal comes around (yr 2 or 3) and premiums have gone right up – client either thinks to cancel cover or reduce the sums insured to make it more affordable. who wears the cost? well, the Adviser of course. What a joke.

    • This development, and my dealer group already hyper tight compliance, make it clear to me, I don’t offer insurance advice unless paid up front. Otherwise “go call direct insurance LLC”

  2. “however it has been made clear to us that this is not something the community will now accept for the long term.” – What community? the product providers community?

    I have not read anywhere that the cost of insurance will be now more affordable for Australians as a result of these measures. Instead, all that has been focused on appears to be adviser remuneration.

    • One significant issue I have raised with life office CEOs and their underlings is whether the hybrid commission rate of 60/20 is EXCLUSIVE of GST or INCLUSIVE!

      If EXCLUSIVE I can adjust to 66/22 including GST having written most of my business on 80/20 over the past 20+ years.

      If INCLUSIVE, 54.55% first year and 18.18% plus GST adding up to 60/20 is far less palatable.

      As I pay 90% of GST rec’d from life office commissions to the ATO each year the 60/20 commission deal MUST be EXCLUSIVE of GST.

      Can anyone confirm this for me?

      • All the figures exclude GST. So for clarity from 1/1/16 the caps will be 88/22 for hybrid. Level commissions at current arrangements can also continue providing insurers continue to offer them.

        • To Brad Fox – if that’s really you – 3 year retention period!! I had a client call me yesterday to cancel policies I set up for them 18 months ago because they have now sold their business and no longer require Key Person or Buy/Sell Cover. I took a Hybrid commission of $9,000, under the new retention rule i’m up for a $5,400 clawback through no fault of my own. What an absolute joke.

          • How are you meant to control the uncontrollable with the 3 year claw back? Adviser still do the same amount of work to get a policy in force, and in a circumstance where the adviser has no control, they and their business are penalised!

          • I’d be very surprised if Mr Fox replies to your question. The AFA have shown themselves to be absolutely toothless of the last few years. I have no confidence that it represents the interests of advisers (or their clients) any longer.

          • What about this scenario…..client comes to see me and needs $600k life insurance, takes out policy with AIA. Comes back in 23 months time requiring a review because they’ve bought a house and taken on $1m of additional debt. They now need $1.6m cover and because of the large sum insured Zurich can do them a better deal. Do I do the ethical thing and re-write it with Zurich and cop the 60% clawback or do I do the commercial thing and just increase the AIA policy to the required sum insured. By doing the right thing by the client I lose. The unscrupulous Advisers will increase the AIA policy and then after the 3rd anniversary re-write it with Zurich. How is solving anything?

      • They will need to form another independent committee to advise on that…
        That would require a moron with a calculator – maybe a new job for that former radio broadcaster.

    • Fox has done his employers bidding. The banks must be overjoyed with this. Exactly what they wanted right from the start.
      Too bad my business will now have 3 years of liabilities when I go to sell. Wonder what it is worth now?

    • That is the biggest concern of mine. I am all for these changes if it means that the clients are going to be better off, but at no point is a client going to receive a cheaper premium as a result of these changes. At the moment I use the commission offset against up front set up costs involved in other areas of advice, which will still be the case but obviously this type of benefit is now capped.

      • Sorry, are you saying your upfront commissions exceed the insurance set up costs, it seems so as you said you’re subsidising other advice costs. That’s why upfronts should be reduced.

        If not, IFAs are not the only businesses where there are initial upfront costs that the business needs to invest upfront in return for a long term customer relationship to generate a profit.

        Timing aside the commission structure pay about the same. Old – 100% upfront plus 3 yrs at 10% equal 130% New 60% + 3 yrs at 20% equal 120% noting the 20% are paid on higher at older age rates. Same calc 4 yrs 140% old vs 140% new, actually equals more $ commission on older higher age rates in yrs 2 3 and 4. 5 yrs 150% old, 160% new. These comparisons are why premium rates won’t be cheaper

  3. I agree with Brad Fox, appears generally reasonable however the clawbacks need to be addressed as per the first comment (Stephen Boyle). The penalty needs to rest with the replacing adviser – not the initial adviser (unless they are the same person).
    There should also be some measurement of the improved cost of insurance to the consumer – especially if the churn argument from insurers is to be believed. A cynic might comment that If a downward trend in premiums is not seen then insurers might be just pocketing the benefit of lower commissions and less churn rather than passing these efficiencies on to consumers.

    • Ha Lincoln, You have no understanding of general business principles.

      Less competition equals higher prices!!!!!

      This was never about churn. The insurers have know who churns for years and could have done something about it 10 years ago. this is all about banks making more money by eliminating independent advisers. Independent advisers DO NOT SELL bank or AMP policies as they are inferior and harder to implement. Small adviser practices will be forced to leave the profession or go work for or under these Bank owned dealer groups. This means less competition and no independent advice which both naturally lead to higher costs for consumers.

      Many clients who’s premium is under $2,000 pa will now have no access to independent insurance only advice and will be forced into the expensive and very basic direct products or be forced to go to their bank.

      Its a sad day for the consumer as the people who most need independent advice can no longer afford it and the insurance premiums across the board are going to increase. Even worse, when these clients realise that their insurance has become too expensive they will have no one independent to review their policy and will have to go directly to the next insurer they see advertising something on TV or back to the Bank who will only ever recommend the bank product due to all the sales incentives offered by the bank for selling the bank policy.

      • Could not have said it better Ben, in all of this I fail to see how the client is better of in anyway ? the life insurance companies hide behind the consumers so called unrest ? I have never heard any as they pay the premiums and hope they never claim.

        I look forward to the cheap premiums the consumer will enjoy 🙂 yeah right.

  4. So next years scandal? Thousands of Australia’s with no super as advisers sell even higher amounts of cover through super to avoid lapse risk and makeup for the lost revenue with larger case sizes.
    We’ve addressed insurer profitability, how about some major steps to address adviser productivity?
    Crushing compliance requirements make advisers unproductive and actually contribute to the financial need for less ethical solutions.

  5. It’s apparent that from the governments point of view the interests of big business trumps those of small business. The FSC has clearly won on this and the only beneficiary from these changes are the Instos and their profit margins whilst small firms will potentially suffer serious cash-flow problems and insolvency. Two things are certain at least, that that product providers will be delighted and political donations clearly pay dividends. As far as the interests of client are concerned I’m sure this is as usual, an afterthought.

  6. Stephen Boyle makes an excellent point. What it means to me is that we should stop cannibalizing business from one another and try to find genuine new business and value for clients. This is the way we can survive in the long term.

  7. To write and implement advice with $1,000 pa premium means a loss to the adviser with trailing risk of claw back for 3 years – $600 will simply not cover the cost of doing business. So with the chance of an insurance underwriting decline decision – will clients be prepared to pay a separate advice fee for the recommendations just so the adviser can meet costs? Often not! I think the uptake of insurance within Australia will steadily decline in the years ahead, resulting in a greater drain on Centrelink support – and some bright spark in Government will want to blame advisers for failing in their duty… Lose-lose is what I see…

    • Can anyone explain to me why a premium is only 30% cheaper if you net the commissions? There’s a lot of things that just don’t add up.

      • Pretty simple BKY… Of the premium the client pays heres the breakdown:

        30% adviser commission
        10% profit margin
        10-15% admin
        45-50% claims

        • Thanks but that doesn’t explain that fact that a net of comms policy makes a profit for the provider from year one…not the 4 years the providers tell you.

          • Its actually more along the lines of 6-7 years. Not 4.

            If the provider doesnt have the recoup the 110-120% of year 1 commission then of course they will begin to make profit sooner.

  8. How can the AFA be “particularly pleased to have won ………”

    A three year responsibility period, unrealistic clawback provisions and a reduction in adviser remuneration of up to 60%.

    Congratulations ARE NOT IN ORDER!

    Well, I for one am not going to give the AFA any credit for anything apart from possibly contributing to the demise of many great advisers in our Industry.

    Let’s not forget the client. If “the framework” is flawed how will the client benefit.

    The new rules will be proven to be unworkable. Stephen has already highlighted one area of concern.

    • That is the part I don’t understand, Patting themselves on the back for bending over and getting jammed.

      Ridiculous. the only ones who win here are the providers and THE GOV.

      By increasing profits they are increasing TAX its pretty easy to see whats happening smash small business to bolster the big guys.

      Makes me sick!

      • Tom, the only flaw with this argument about more profits is that (if the figures I have been given are in any way accurate) profits will reduce because new business to the Life Offices will just dry up.

        Costs associated with generating new business will not make it at all viable.

        Then, when you get sued when your client’s claim is denied (for not having the best definition in the marketplace) it won’t be your fault – it will be the fault of the regulators who introduced an unworkable “3 year responsibility period”.

        The lawn mowing round is looking good. At least you don’t have to keep your earnings “in escrow” for three years before you can call it yours.

    • Precisely! The AFA no longer represent the interests of advisers or their clients. The organisation is completely toothless.

  9. Well done to the FPA and the AFA, you have taken it the way the government gives it. There is no valid argument being made for our industry, the real issue could have been policed so much easier, but it does narrow everybody’s competition out as the only survivors will be established practices and of course the Banks (weren’t they in trouble for advice related matters recently?) rich getting richer….nice future, well done!

  10. So it’s a win win for the insurers and banks then. No risk for them, profits go up because of reduced upfronts and then they can claim back most of it if it drops off within 3 years.

    So it is what it is – how about the insurers now come out and tell us that their premiums will be reducing accordingly?? I just can’t see it…

    Insurance will become too difficult to write with the risk of claw backs and will mean advisers will not want to touch it so we end up with an even bigger under insurance problem in Australia.

    The insurers will be begging us to write business for them sometime soon but it will all be too late by then as I feel as the damage has been set right now
    Way to go….

  11. well one clear winner here, the direct providers…. no issues for them just keep selling inferior products

  12. Riskinfo has said the Assistant Treasurer, Mr Frydenberg has realeased these reforms as “proposals”.

    The final form which eventually will be gazetted into law may see further changes before the proposals are adopted. These new concepts are better than Mr Trowbridge’s recommendations at least.

    I agree with Daniel’s comment above re AFA stating that ‘the community won’t accept a 80/20 commission model’. The insurance-buying public have no idea about this concept and generally will accept any terms offered to them – within reason.

    Finally, the life offices have much to do to tidy up their act. How often do we as advisers submit proposals, particularly online ones, then basically have to do the work of internal staff? Often we have to do the job twice before the policy goes into force. Are these life offices getting the fine-line scrutiny that we as advisers are getting from ASIC, the ATO and all of the other governmental regulators?

    • Very good comments Paul. Your mention of how we as advisers have got to do most of the “front and back office” administration to get our clients insured has been sadly understated in any discussion from the “interested parties” of these proposed changes.

      Should we now consider relinquishing these imposed procedures by putting the onus back on the Life Office ‘systems’? Am I going to be able to maintain my staffing levels to do what we do now if my revenue is to drop by a minimum of 40%? Some Life Offices are already showing signs of fatigue in all three areas of New Business/Underwriting, Policy Administration and Claims. Will these Insurers show us and our clients some significant improvement if they have the security of three year claw-backs?

      I can’t wait to see the effect of the three year responsibility period on “direct and on-line” Business. The proposed 40 or 50% out of their annual budget might just stop all the crap advertising. Just a thought.

      • Thanks, Ted. The part about life offices doing their job is not new. We, as a business, may become consultants and inform life offices that if they want to get new busines into force they should put ALL internal staff on an incentive basis – a bonus, if you like.

        It seem to me that if such were adopted we’d see new business acceptance and completions increase by 50% a year – many of them completed on the Friday before long w/es or hols!

    • What happened to opening up APL’s for more providers? I know of a licensee who wanted to give their advisers more choice, so they took two insurers off their panel, and replaced it with one! Of course their own insurer (Bank product) remains on the APL.

      And when has ASIC EVER review a compliance document and decided to make it simpler? We know their stance on Advisers, just look at the sample they used to compile their report into insurance!

  13. As a holder of my own AFSL this three year clawback scenario could be deadly. I may well have to book a contingent liability reducing my asset base requiring further cash to be held in the company. Cashflow nightmare. Also, I write a policy for a $700,000 a year executive including IP etc, a years time they are made redundant and choose to cancel the policy due to cashflow issues. Not anyone’s fault but I’m left broke due to clawback.

    It looks like I’ll be advising on insurance requirements and building it into my fee structure, then leave it up to the client to find a way of implementing it.

    Welcome to seriously underinsured Australia.

    Brains Trust 101 in Canberra – NOT

  14. One would have to be commercially silly to write insurance going forward. get paid 60% inclusive of GST, then hold the risk for 3 years where at least 10-20% will fall off so really you are working to make 40-50% upfront in “real dollars” , subtract costs , paraplanning, rent, office expenses etc, and you will have a real margin of 20-30%. the real beneficiaries are the insurers and the direct salesman. I will be staying with the bank! feel for the risk writers who have been decimated under this policy, the major insurers and banks are smiling ear to ear, and so too the government as they take a larger clip of the profits that will roll in.

    • Not sure if the insurers will be smiling for long.

      A much reduced amount of new business being submitted plus a spike in litigation costs due to policy holders seeking legal representation when they have issues with claims (i.e. no advisers to guide them).

      • Exactly WB. This will provide a short term cost saving for the insurers but a massive longer term drop in revenue. Although some new business will migrate to direct channels, it will only be a small percantage. Without advisers there to nudge them along, most people will succumb to inertia and remain uninsured. Those that do take out direct insurance will massively underinsure themselves both in types and sums of insurance.

        Claims litigation and PR issues will go through the roof due to all the fine print exclusions in non underwritten direct policies that most people only become aware of once they try to claim.

        On the investment side of my business I will be advising clients to get out of insurer stocks!

  15. The structure of the advice fee will then be the costs to create the SOA plus say 60% for the (possible) clawback fee. This is the only way that the adviser does not suffer a loss should the client cancel within the 3 year period. So the costs gets passed onto the client. Not a good outcome.

  16. I’m sorry but you have to laugh, this is truly a joke. I will now cut back one staff member and will run my practice as lean as possible. The compliance costs are killing most businesses anyway.

    Also the joke about widening the approved product list – MLC last week put in place measures where their advisers must ask for a pre-aprroval to write TAL product.

    Advisers take heed – you have between 6 months and 3 years to exit the industry.

  17. Regulators should stay out of business!!!!!!!!!! Let the life insurance companies and advisers decide how to structure products and remuneration. A politician in Canberra will never understand what it is like in the real world. No matter how many well meaning lobbyists he or she listens to.

  18. Great work frightenberg!! Now we are going to have insurers report to asic when an application is lodged and there is replacement policy data!
    This will blowout underwriting times making even less affordable to write risk.

    This policy is a death knock to many small business 1-5 man operations as they will not be able to sustain revenue in the first few years unless they are established. We will see a collapse of some small dealer groups as well.

    Forget about the new generation of advisers coming through as this industry is potentially no longer a career path unless you work for the instos…

    Great news for direct providers.

    80/20 with 2 years would have been sufficient.

  19. So when a company ups it rates by 40 or 50%, which has happened in recent years, and a client decides not to continue for that reason, we get punished? That’s a fair system. Are they going to write us back on death also?

    And as for Brad’s comment about the ‘community won’t accept an 80/20 commission split’, what ‘community’ is he talking about? It sure as hell ain’t the public. Maybe its the banking or ISN communities he is referring to. The AFA has been trampled on here and instead of at least going down with a fight they meekly agree with the outcome. I would cancel my membership except it is now compulsory to be a member of a body such a theirs. Another fair system.

    • Yep and I paid my CFP membership yesterday… they decided to make a submission after the ‘trollbridge’ report was released – phew thank god I have these wise men and women protecting my future earning capacity…

    • he was referring to the provider “community”, you know the ones that pay huge sums to AFA and FPA

  20. Time to drop Insurance offering I feel if this comes in as is. I’m sure many an adviser will follow !!!!!!

  21. Well done to all involved, you’ve just demolished my profit margin. No profit, no business. Ridiculous clowns.

  22. We all knew this would be the outcome, we all knew that the pain would be absorbed by Advisers.

    the Job now is to adapt and win.
    the consequences will be damning for many, I see many practices leaving the business, or being absorbed (merged) with / by others, to try and gain some kind of critical mass and cost efficiencies, I see increased costs to the client, these will be as a result of having to pass the already high compliance costs on to the consumer. then there is the impending increase costs in dealer fees mooted by many.
    I am going to reserve my judgement on this to see what the support and response will be from Dealer groups and insurers.

  23. Nothing to say really – speechless at the pure lack of intelligence being demonstrated by supposedly intelligent people. Hopefully Solicitors will lower their costs in sympathy as will Accountants, Real Estate Agents, Doctors.

    I think we had all better go to our local Member with this one as we are doing with the wonderful “OPT IN” agreement!

  24. I agree with the comments above. Its just another con job by the institutions. With all the bad advice stories in the last 2 years with the Banks being the culprits guess how many AFSL’s owned by the institutions have lost their license. Answer 0.
    One rule for the Banks another rule for the independents. (oops we cant call them that can we)


    The Life Insurance Industry in Australia passed away on the 25th June 2015 (suddenly but not peacefully).

    The Funeral services will be held progressively between 1st January 2016 and 1st July 2018.

    The Life Insurance Industry was established in Australia in the 1830s to look after the well being of widows and children and to protect Governments by reducing the burden of vulnerable people on Government expenses.

    The Life Insurance Industry will be survived by what can only be described as a half hearted attempt to placate the Financial Institutions of Australia.

    In lieu of flowers, memorial donations may be made to the families of all those hard working, well intentioned, passionate risk advisers left behind in the wake whilst trying to look after their “clients best interests”.

    Our deepest sympathies are extended to what will become the remnants of an great Industry.

    Rest in peace!

    • Well said Roger (as usual). Sad day for the soldiers when the “Officers” only look after themselves.

    • Well said Roger!

      As we all know, the UK banned commissions immediately following the GFC, a impulsive move that proved to be devastating. Thankfully, it didn’t take too long before that decision was reversed.

      We may not see commissions banned, but I wonder how long it will be before the bureaucrats in this country realise what a mess they will have created for the life insurance industry?

      Watch this space!

  26. So now ASIC and the FSC have looked after the sustainability of the insurers WHat about all the advice business’s that are now unsustainable

    What I want to know is why is the assistant treasure involved in our debate – maybe he should spend more time concentrating on how the govt is going to pay all the welfare benefits that these changes will bring

    Once again the regulators and the govt are so out of touch there has been no consideration in all these responses with regard to consumers being better off just publicity for a lackluster asst treasurer!
    ASICS original charter has been pushed by the corrupt labour govt from the start

    Once again our regulators take it upon themselves to control something that is not broke
    Why don’t they ask consumers and use data from complaints – not dodgy ASIC INVESTIGATIONS
    what a bunch of jerks we have running this country

  27. Well you can take your life insurance advice to the bank!
    Liberal Government, what Liberal Government??
    Sorry I am trying to be funny but there is not other way to look at this.
    Well played banks – you won the Minister over. Now you can line your pockets.
    Sincerely thanks for all the hard work AFA and FPA – I believe you need to be recognised for supporting advisers – we are just in a situation where a Liberal Minister has missed the issue completely.
    Said day for small business advisers, and for the Liberal Government.
    Mathias come back!!

  28. If we are talking commission to the adviser, 60% would be great. However the adviser never gets the stated commission, as people seem to forget that 10% GST, up to 9% modal loading, policy fees, stamp duty and dealer fees are deducted from the commission first, then the practice has to deduct their Business expenses, which in the current world of red tape, adds substantial on-costs.
    It would be nice to get 60%. The truth is, after expenses the adviser will be lucky to get 6%.

    A 3 year clawback period. This model if implemented to the rest of the Business world, would send the world economies into a death spiral, with all Businesses having to treat Income received as a recoverable debt owed, that does not vest as income for 3 years.
    We will be expected to employ people, pay additional massive expenses to write Life insurance which we cannot recoup and then have to pay back money that was spent on running the Business up to 3 years previously.
    Based on that model, the commission should go up, not down.

    Life companies to offer fee for service insurance products to support those advisers. Does that mean differing policies and benefits from products that pay commission?

    Ongoing reporting of policy replacement data to ASIC by Life Companies. What is the format of the data? To date there has been no explanation of what questions are asked when a policy lapses or is replaced. Without clear guidelines, this is a total waste of time and will be viewed as tainted data from Life Companies.

    In order for ASIC to review SOA’s to make disclosure simpler, it may be a good idea to include non-lawyers who can help to reduce the legal wordings that confuse all non-Lawyers.

    The AFA has said a 80/20 commission model is better, though the community will not accept this. This is wrong. Clients want good advise, that is easy to understand and their adviser to help them deal with Life Companies. They do not care how their adviser is paid and 100% of clients we have asked, said they prefer not to pay us from their after tax income, they prefer the Life company to pay commission.

    A 3 year clawback period is not a win, when adviser practices must still spend thousands of hours each year, fixing Life Companies inefficiencies.
    Fix the admin stuff ups and red tape, then a 3 year claw back might be justified.

  29. Has anyone read the report in the Herald Sun saying that the average upfront commission is 120% and the average premium is $3000 – $4000. Where do they get these figures from????? . Any wonder we are are being railroaded into this unviable rubbish that is being put forward by those in charge.

    • They get them from the ISN, where else. I am yet to see any publication, including this one, that actually questions any of the BS that group pedal. Bill Shorten admitted he ‘may have’ lied yesterday. I wonder if that was the only time?

  30. Well now that the life insurance commissions have been cut 50%, will the licensee cut the their fees 50% for advisers to accommodate advisers. I think not. Will PI premium and all the business overheads be cut 50% no way! IFA Advisers will cease writing insurance as there is simply no money in it. The big effect will be the reduction in life insurance written overall as adviser seek out other more lucrative business opportunities. The life insurance companies will rue the day they agreed to this. Just watch the knock on affect it will have to the Statutory Funds that pay the insurance claims. If there is not a lot of money coming in to the funds due to less insurance premium being written, how are they going to pay the claims! 10 years from now the life insurance industry will be domiciled solely by large institutions. IFA will have died out. Time to find greener pastures.

  31. Please note this date 25th Jun 2015 in your diary as the …DEATH OF THE NEW LIFE INSURANCE SALESMAN and THE DEATH OF SMALL BUSINESS BEING LOOK AFTER BY A ADVISER…..Congratulations to the Liberal Party and the FSC,what team.
    To the AFA,what a joke.You have not stood up for the adviser ,maybe its time for a independant association which is run by advisers, for advisers.

  32. Not even 11am and the childish emotional outbursts have started. Get with the program people and start working out how you will operate in the new world. btw those advisers who aren’t here b#tching and moaning are out there seeing your clients…

    • Anonymous, inane comments and you go under the pseudonym of “LifePunk” – is this what our Industry has become. Sounds like Daddy Day Care to me.

    • Be very careful LifePunk! Disparaging your fellow advisers that way demonstrates your ignorance toward a very serious issue.

    • Life punk. you have no idea. Even though this will decimate the independent advice practices and dealer groups (myself being the owner of a practice) i could understand these changes if there was any benefit to consumers. However none of what Frydenberg, Brad Fox or Trowbridge have said indicates that there will be a reduction in costs for consumers. Their statements barely even address this issue of cost and Trowbridges report did not examine the costs of less competition on premium rates, it only made the ASSUMPTION that getting rid of churn will allow the insurers to reduce premiums as high upfront commissions will reduce their costs. why would these insurers reduce rates when there is no competition or independent advise. They will raise them for sure and make more $$$.

      mums and dads will be left uninsured or with direct unadvised policies and NOONE TO HELP THEM AT CLAIM TIME. lawyers will be loving this

    • Rather insensitive remarks, old boy. There are a lot of fine advisers out there who are naturally concerned about their livelihood. Likely many have families, young children to support, mortgages and many other lifestyle costs to care for. And you come up with this trashy nonsense.

      If you’re an adviser (which I doubt because you’ve reflected the sensitivity of a robot-driven mining rear-dump truck in an urban backyard) it might be worth showing some contrition by making a retraction here.

  33. Great win for the banks and life insurers.
    I have already been told by three major life insurers “not to expect life insurance premiums to reduce with the changes”.
    Changes to my business = where the average premium written through my business is $3,000 and via an 80/20 hybrid model I would receive $2,400 in year 1 (and not charge the client an upfront fee), I will now under a 60/20 model charge the client $600 for advice preparation ($440 of which is paid to my contract para-planner), plus 60/20 model.
    Who is worse off? – the poor client who has just bought their first home (high debt) and have three young kids ( and face a $600 fee plus the same premium rates). And I really feel for the client who doesn’t proceed with the $600 fee, and suffers a claim while uninsured.
    Who wins? – the insurers.
    I will also factor in a statement in my disclosure section that if the client cancels within three years, and a clawback occurs, the client will be invoiced for this. Once again, the insurer wins and the client suffers.

  34. Who else in the community has to give back their revenue up to 3 years after the event through no fault of their own…… no one !! Let’s put responsibility where it should be – Advisers responsible for year 1 and then clients responsible for years 2 and 3. That’s right if the client cancels in year 2 or 3 the insurer sends them a bill. This will stop unnecessary churning and then the companies who want a 3 year responsibility period can deal with it themselves rather than pass it on to advisers. With the current proposal there will be no reason for people to enter the industry.

  35. I for one at least thought an 80/20 Hybride would be the result and quite frankly needs to be This proposal still has to pass parliament and AFA and FPA still have a chance to redeem themselves and structure a plan to oppose this before it is legislated Why should we yet again take it up the A£#}%£% because of there stuff up no matter how well intended the origional intention may have been
    Come on Brad your suppose to be there for us as well at least go down fighting
    Tell me ( and I am sure the rest of us sdvisors) what is your next step were not dead yet !!! Let’s get something together and have it presented by a politician with some clout and understanding

  36. I agree with Roger Smith, “The Life Insurance Industry in Australia did indeed pass away on 25th June 2015”.

    After 32 years in this industry it’s probably time to pack it in. I thought we had been thru all the ups & downs with compliance and legislative change.

    There is indeed a conflict of interest considering the level of underinsurance of the Australian Public. The Australian Public deserve professional, ethical advice.

    Who will be left in the industry to give that advice? The product providers will continue to prosper, many advisers will leave the industry and the level of underinsurance will continue to rise further & further.

    Who can work for nothing? I love this industry, but I can’t & won’t work for nothing, is there any body out there that will?????

  37. Hi Government,

    Sitting in Canberra I am not sure if they read actually reports presented by Towbridge etc.

    General Insurance Contracts or Life Insurance Contracts are generally same but GI has less commissions and no claw back periods or maximum one year.Why cant they follow GI rule like pay upfront commission in equated monthly installments that way if policy cancels which is never fault of Advisor and he has not to pay from pocket.

    Clawback period no matter you make 10 years or whatever will not solve Insurance contract lapsation/cancellation problem .Cancellation reason is not only upfront commssions.

    Overall Lobbyists gain.

    Reduce premiums as well so consumer gains as well,He is really paying cost.Ask any 55 smoker .

    Advisors have to put in their Factfinds ,SOA if you cancel policy with in 3 years we will charge you back .And client is not responding. Refer to Collection agencies.

    Contracts written by 31 Dec 2015 will have one responsible period.Guys write up and leave the country thats what they are suggesting buggers.

    Not agreed on Clawback period which is not only due to Advisors its due to claims client financial position, change in circumstances and other unknown reasons.

  38. Who else in the community has to give back their revenue up to 3 years after the event through no fault of their own…… no one !! Let’s put responsibility where it should be – Advisers responsible for year 1 and then clients responsible for years 2 and 3. That’s right if the client cancels in year 2 or 3 the insurer sends them a bill. This will stop unnecessary churning and then the companies who want a 3 year responsibility period can deal with it themselves rather than pass it on to advisers. With the current proposal there will be no reason for people to enter the industry.

  39. A few years ago a client sought sustainable, long-term insurance cover so I recommended and implemented a level premium policy for him. In the proceeding 9 months I bought this client along with others in a book from the adviser I was working for. 3 months later I got a claw-back because the client got a ‘better deal’ from another adviser (which was a Stepped policy, so more expensive in the long-term) and cancelled the policy I set up.
    The sting in the tail was I got hit with the claw-back (being the servicing adviser by that stage), even though the adviser I previously worked for got the upfront comm!! To add insult to injury, I also paid 3 times for this client in the book sale process!!
    As a result, I added in the “Mercenary Client” clause to all my SOA’s that stated should the client cancel or lapse their recommended insurance policies within the responsibility period – the client would be invoiced for the clawed back commission.
    This will now be highlighted within EVERY risk SOA I produce from this day forward – completely unviable to continue in this space without it.
    As others have said, the adviser that recommends the cancellation of another insurance policy within the first three years should wear the claw-back – unless they can provide evidence the original policy was not in the ‘client’s best interest’.

  40. Life Punk is right, he obviously inherited daddy’s business, put your real name up or shut up! Little hidden figures like this that allow this rubbish to happen in the first place. I am sure all advisers would like to know who you are.

  41. Who else in the community has to give back their revenue up to 3 years after the event through no fault of their own…… no one !! Let’s put responsibility where it should be – Advisers responsible for year 1 and then clients responsible for years 2 and 3. That’s right if the client cancels in year 2 or 3 the insurer sends them a bill. This will stop unnecessary churning and then the companies who want a 3 year responsibility period can deal with it themselves rather than pass it on to advisers. With the current proposal there will be no reason for new people to enter the industry.

  42. Vocal minorities in this forum sadly shape how we are seen externally. I wonder how many have actually read the outputs from any of the reports. My sources tell me not many…When our friends at ASIC and the Govt read these comments it simply reinforces what dinosaurs we are. For those experienced advisers out there, help the rest of us and provide insight, guidance and ideas on how we can work through this. Oh and btw these recommendations are not final. We still have to wait for the FSI debate which (as you may know), still recommends level comm.

  43. What happened to the “Lower Premiums” for consumers? neither AFA or FPA or FSC or Fryydenburger have address this from Throwbridge’s report???????? or I missed it in the above article.

    It seems these outcomes only serve the Life Co’s and Banks bottom line, has never been about the consumer or as Brad said poor advice, it’s always been about their profits and reducing commissions, Jeez their BDM’s were selling this 3 years ago, you must think we are all stupid.

    The SoA I have to use is over 38 pages for risk only, if you want to pay me less, the compliance will have to be less and Life companies will have to pick up their admin also as currently most are terrible, but massive staff cuts for profits will do this to organisations, pity IFA’s have to pick up the slack and now they want to pay us less to do so.

    Also I can’t see anywhere in the AFA or FPA’s joint response with the FSC and Frysenberger that would imply that the “Community” would not accept 80/20 split. It’s just all lies, the only groups who wouldn’t accept it was the ones paying it, my clients don’t pay it…..

    I don’t know how these people sleep at night. Probably with lots of scripts from their GP………….

  44. There’s only one answer to all this that EVERYONE should do! Resign your memberships with The AFA and FPA immediately! If they have no members on their books then they cannot represent us and will CEASE TO EXIST! Don’t think about it, DO IT! This will send the message to them and they will think twice about what they are proposing!


    There’s only one answer to all this that EVERYONE should do! Resign your memberships with The AFA and FPA immediately! If they have no members on their books then they cannot represent us and will CEASE TO EXIST! It will also give them a taste of what they want to do to the IFA, a substantial drop in their income!

    Don’t think about it, DO IT! This will send the message to them and they will think twice about what they are proposing!

  46. To show support for these changes by life companies (Yes there a re a few who have already welcomed these changes) is a support to control the consumer.
    The ACCC should be investigating the non competitiveness of the proposed changes.
    The consumer has once again been put last on the list.

    As for Lifepunk – the sad thing is all these articles and discussions(Inc individuals and firms with their own agenda) are kept mostly within the industry, the average consumer out there hasn’t got a clue as to how much regulation and debate goes on, its all inhouse and kept from them.
    The only thing I ask is that individuals that have had the gravy from this industry stop resting on your laurels and claiming commissions are bad etc – bloody hypocrites!

  47. How about we form our own Association ? I am sure there are plenty of willing members at the moment ??!!

  48. So as everyone else has stated, what a disaster of a day for this industry.

    I for one as a Hybrid writer will be losing approx. 25% or so of my remuneration for 0% extra ongoing, how is that a sustainable outcome?? The only glimmer that I heard a few days ago was the fact we may now be getting paid for the Stamp Duty/Policy Fees etc to make up some of the difference, we will see if this happens??

    When does the 3 year claw back start, is that from Jan 1 2016? Either I have overlooked this or its not stated a date so does it start now?

    I wonder what this now does to the value of books, surely this will decrease value as there will be a lot for sale in coming months/years.. I will be taking BOLR when it is available to me no and getting out, it’s a minefield an industry to be in now, what other changes will happen, none of us can tell, cashing out while there is still a value may be only for some of the lucky ones.. Does this also spell the end to BOLR now?

    • Sorry, my bad, I only skimmed this article, read it elsewhere and came here to see comments.. I see its starting in 2016 (Clawbacks)

  49. I sit here absolutely dismayed at what I have just read. I concur with most people’s comments.
    As a small practice it has taken me 6 years to build it and in the past few years with all the changes I have asked myself is it worth it several times.
    Now I see my income reduced in some cases by 50 %. Quite simply this puts me out of business!
    Claw backs policy will be the killer – many things occur to trigger a clawback – Last week client cancelled as he had not been paid in 2 months. A Large unexpected clawback resulted and had had a large impact on my monthly cash flow. a 3 year period is simply unworkable.
    If the above is implemented – I simply would not have been able to survive in the industry whilst building the business. Now i see a large proportion of my business income gone just when i got it to cover business expenses etc.
    So outcome is – no one will start in the industry – many small operators will simply have to leave, many existing businesses and licencess will be impacted with the claw back liability.
    I was going to join the AFA / FPA several years ago and saw what clout they had which ended up being zero to change anything. Now they are willing to accept a 60/20 position!

    Sorry but if the above goes through i will be another casualty as I will not be able to simply afford a 3 year liability on insurance and a large drop in income as a small turnover business.
    It simply isn’t worth this all – I can work elsewhere without having to employ staff, worry about compliance and earn a decent income with annual holidays!

    • Im in same boat as you – small practice for 4yrs, started from scratch, pretty much relying on upfronts to get through. Now this, and the added compliance of FoFA… what industry has ever had these amounts of changes? This industry is too disruptive, too much compliance and red tape, and too much risk (being sued, 3yr clawbacks).

  50. I will be scoping out insurance advice altogether. Too much red tape involved for little if any net profit.

    Then you carry the risk of clawback, or court action for a denied claim, even when you have great filenotes and acted in the best interests of your client.

  51. Where was the cost of acquisition taken into consideration? I just can’t see a way of this possibly working unless you have a consistent stream of prospects knocking on your door wanting to buy insurance. That just does not happen!

  52. Okay…so the strategy goes like this assuming the proposed 3 year retention clawback is not retrospective to all current business and will only apply to new business from 1st January 2016.

    Rewrite every possible existing risk client over the next 18 months to the 80/20 remuneration model, ensuring that all advice is of course first and foremost in the clients best interest and satisfies the clients needs and objectives.

    Not only will the adviser receive an appropriate level of remuneration for the initial advice in the form of 80%,but the advisers ongoing remuneration may well double or, in the case of much older risk policies, possibly triple the level of ongoing remuneration.

    To offset the impact of the future reduction in maximum upfront commission of only 60% and subsequent reduction in remuneration,the ongoing remuneration to the adviser will have increased substantially allowing for greater ongoing cash flow.

    For those advisers who are fed up with the current situation, employ this process consistently for the next 18 months, wait until the renewal income stream is bedded down and quantifiable and then sell your business for a multiple of 3-3.5 x renewal income stream and double or triple the value of your business compared to current valuation and then get out.

    Of course, the absolute stupidity of the ridiculous situation that has eventuated was designed to address the level of so called “churn”.
    If the insurers think they have some experience with churn over the last decade, they haven’t seen anything yet !

    And remember…….every adviser in the country owes every insurer exactly the same respect as they have given the adviser…..absolutely nothing.

    So, when the proposed system arrives at the 60% initial commission level on 1st July 2018, the adviser will then simply provide the client with an invoice for an Adviser Advice Fee in addition to the commission payment for the difference between the 60% and the current Upfront commission level.
    The adviser will then be remunerated partly by commission and partly through a direct payment by the client for the advice and implementation process.

    We hope Josh Frydenberg and Mathias Cormann are sitting outside in the cold Canberra air having a cigar on us……..

    “The Liberals….Champions of Small Business” !………what an absolute disgrace.

  53. Brad, This is make or break time for the AFA. I know the organisation feels it’s better to be at the table than not and I appreciate you and your team have tried to work with those who are seeking to bring down your members. Arguments that it could have been worse are unacceptable. This outcome is the result of a number of the larger institutions colluding to produce an anti-competitive playing field. Once our numbers thin and the bankers no longer need the AFA’s tacit approval they’ll pull their sponsorship and the AFA will become memory. To quote the mighty Midnight Oil in Power and the Passion, “It’s better to die on your feet than to live on your knees”. It’s time to demonstrate you will stand up for your members. A lot of advisers and all their clients are counting on you.

  54. Since my post this morning I have found myself in a quandary. I’m sitting at my desk looking a 4 policies ( in force for 12 months ) brought into me by a couple of clients. In the ‘new world’ of next year what should i do. The policies are badly structured , inappropriate TPD rating inadequate I.P. incorrect ownership and so on. If i rewrite them am i a ‘churner’ do i do nothing as the clients were not interested in ‘fee for service’ Plus as has been suggested If i as the adviser re write the policies will i in fact be responsible for the claw back ! should i cop it ? These clients are clearly in need of appropriate coverage. This thankless complex industry which is like walking across a mine field blindfolded keeps getting worse .

  55. I think a royal commission should be called into this mess. Clearly the banks and large insurers are the ones negotiating for the benefit of themselves. You can dress this up anywhich way you like but the fact is the outcomes are commercially in the interest of the banks and insurers. clients are worse off because the small guys are the ethical guys. its how small businesses grow and flourish, with ethics. the unscrupulous product pushers that work for banks and direct manufacturers are just that, product pushing grubs that are chasing commissions. their argument that they need to become profitable to be sustainable is in part true, but they could have addressed the issue of churning and cut the fat out of their businesses by implementing systems to reduce costs, and reduce their fat cat salaries and those with do not generate any value to the business. But its easy to point the finger at the adviser and deflect from the underlying issues that are easily resolved. What a greedy industry I work in. I feel sick in that I have to look my clients in the eyes and tell them the truth , in that this change is all about increasing insurance profitability rather than saying, this is wonderful news to you as your premiums will come down.

  56. Shame on the whole system. Where do you start? There are many comments one could make but the main one for me is the short sightedness of the 3 year responsibility period. Obviously it is there to stop the knobs who restructure a policy on the 366th day. How on earth do you budget for the prospect of changing economic conditions resulting in a loss of 100% to 30% of earned income over a 3 year period. What…does the government think that all the work done and compliance advisers have to abide by magically happens? I think that is the most ridiculous thing I’ve ever seen. Couple this with a reduction in income and you just have a situation that is unfathomable. AFA you need to grow some kahunas and stand up the the adviser. You have failed as our representative. Stephen Boyle’s comments are spot on. If people making decisions actually had a clue, then there would be a mechanism for a review process whereby Stephen could plead his case and if it is found that the advice was indeed poor, then Stephen shouldn’t be disadvantaged.

  57. Maybe Jacquie Lambie will vote against it when the proposals hit the senate. She’s a reasonable person.

  58. In response to Guy Mankey I suggest that Brad Fox actually take heed from the words of Sting in An Englishman in New York, “It takes a man to suffer ignorance and smile, be yourself, no matter what they say.”

    • Just had another thought.

      the main benefit of having an independent adviser is I WILL BE THERE TO HELP YOU AT CLAIM TIME. This is when clients need INDEPENDENT advisers, otherwise they will be left to deal with all the hurdles the life companies put up and many will give up once they are confused by the claims process. we do not charge for this and if it were not for us clients would either not get paid or have to give up half their payment to ambulance chasing, moral lacking lawyer shysters from Mauric Balckburne etc.

      The independence of advisers is the only way to make sure the client gets looked after. We have advised the client to get this policy and will make sure that all fair claims are paid. We are the professionals and know when the insurers are being unfair or hiding behind rules which are not a valid reason to decline a claim.

      These new commission amendments will not make the insurance cheaper as there will be less competition. They do not satisfy the best interests duty as clients will be left with whatever policy their bank or direct insurer sells with no chance to review to another superior policy and most importantly clients will be left to deal with the claims department and all their “jargon” and trained strategies to refuse claims or get people off IP claims.

      Great work banks, you have won again. As they always say. If you cant beat them join them (even though this is the ultimate goal of this review commissioned by the banks, and their employees Trowbridge and Fox). I’ll just have to stop caring about my clients and see them as $$$$ and do everything to get their money and then leave them high and dry and move on to the next victim.

      churning my book (not TAL, MQG Zurich AIA) and and then quitting and selling my soul to the banks. Not sure how i will be able to say with a straight face that the expensive and rubbish bank policies are better than the other policies but im pretty sure the induction on the bank training days will drain all the empathy out of me and will make me a product pushing, target chasing gangster who’s only goal is to make money for themselves and their boss. and if the client doesnt like it too bad. there are plenty more suckers out there

      Also why do Mortgage brokers get paid commission. I know that a loan rate of 5.6% is better than 6.6%. why do they get paid for the 25 years of the mortgage? you dont need your mortgage broker at claim time.

      I love that the AFA think that they still work for advisers. If they did, they would have self regulated out the rediculous commissions available to group super such as 2% ongoing comms and up to 5% contribution fees…. FOR GROUP SUPER. These guys are the millionaire 50+ year olds who have made their fortunes by ripping off the aussie consumer for years and now they are sitting pretty in their mansions telling the new up and commers that we need to adapt to these new rules and if we cant then our business models are faulty.

  59. “Mr Trowbridge’s sentiment was echoed by the Financial Services Council, which argued that the industry would go further by moving to a fee-for-service or level-commission model if there were no significant changes to consumer outcomes within three years.

    “This model is part of the reform package and is increasingly being adopted by life insurance advisers. In the long run, we expect most advisers will naturally move to a level-commission or fee-for-service model,” FSC chief executive Sally Loane said.” (SMH 25/06/15)

    The real agenda for the banks – protect legacy books and increase profitability by destroying competition. By the way does anyone have evidence that there are adverse outcomes for the consumer at present …. except when bank financial planners are involved?

  60. Has anyone ever seen a requirement on an SOA to disclose the retention period? Maybe this is what will now become a major focus for future SOA’s. It might go something like this.
    Mr/Mrs client, the remuneration that I ACTUALLY earn may be nothing like that stated in dollar terms and percentage term in your SOA. In fact I could well earn absolutely nothing and after the “one sided” recent negotiations in our Industry if I (survive) a period of three years I will in fact receive the amount stated in the SOA. If you for whatever reason change your mind or if the Life Office rejects your application I will earn NOTHING. If you become influenced by someone else in the Industry to change over servicing to them they will in fact get my remuneration BUT I will be holding the responsibility for the 3 years anyway. Have I made the issue of remuneration clear enough or would you like to speak to John Trowbridge. John’s remuneration is based on 100% of what he earns he gets to keep – like most other Australians who work hard EXCEPT RISK ADVISERS. You asked about what I have to pay tax on. Well it’s interesting that I have to pay tax on 100% of the income I receive even though there is quite a strong possibility I won’t actually get to keep it and I cannot make provision in my business accounts for that contingency. Sorry what was your question? Yes, asking why anyone would be stupid enough to work under those terms is a very valid question. The only thing in my favour is that my life expectancy (keep your fingers crossed) is 19.2 years so it looks like I have to make a business decision to stop writing Insurance policies at the latest in 16.2 years but perhaps it will be a lot earlier than that..

  61. That new SOA is probably not as far fetched as it sounds and is very accurate.!!!

    Well explained I might plagurise that if that’s ok. Maybe we make it a industry standard I am sure the life offices would welcome it ???? For the few clients that actually read them they would be astonished ??

  62. Still would like to see evidence that any consumer was asked by Mr Trowbridge what their preference would be, commission or fee. I have, and commission is preferred in every instance. SOA’s have declared the amounts we earn for many years, and we have not had a complaint as yet. Consumers understand we need to make a living, and appreciate not having to make upfront payment, particularly when they have no idea if they are even insurable in the first place. Fees will only force consumers to take no action, or look to the internet for answers, and we all know how reliable that can be. If it was that easy, all life advisers would have died off years ago. Premiums won’t reduce, as there is no cost saving to insurers in the long term, due to higher renewal commission . Somehow, the life companies think these proposals are a better solution than just refuse to accept business from serial churners, who they have known about for years. Would you like me to provide a list of names again for you?

    • Well said Leighroy – the most important aspect that has been completely ignored in all of this has been the consumer. No-one from our regulators or government have done any research with consumers just the FSC.
      The 3 year clawback is simply a collusion between the life companies that is non-competitive and once again the consumer will be worse off.

  63. Brad Fox and the AFA should hang their heads in shame, they have let us down totally. Now we all need to pull out of membership of this gutless limp wristed mob of nobodies.

    Would not be a set of nuts amongst any of them.

  64. In none of the communications about this have I seen it stated whether the new caps are inclusive of GST or not.

    Where the words “maximum” are used with no mention to (additional?) GST, I get nervous…


    Can I suggest you pick up the phone and go and see your Local Member of Parliament Liberal or Labor before they introduce such regressive and punitive reforms .
    I am certainly contacting several MP’S again this week.

  66. Guys my business isnt making any profit so im going to lobby the government to get them to lift Insurance commission rates for my own benefit – to create a sustainable future. Doesnt it sound a bit ridiculous when things are reversed!

  67. Guess what? After a questionable ASIC report that did not accurately portray our industry we are left in a situation where the real cost of acquiring new business has shifted from the Insurer to the adviser who must then try and recover from the consumer. Our AFA either did not have the expertise or the clout to stop the avalanche. Instead of now trying to rationalize our loss they should speedily seek the ear of the Minister for small business and others to try and bring some sanity back to the debate. At the moment there is only one winner and it is not the adviser or the consumer.

  68. The only positive thing I can say about this whole Trowbridge fiasco, is lets follow the same UK model. They banned commissions, and it abjectly failed and reverted back to commissions. So guys and gals, lets wait a few years when bank/insurer profits sink, welfare blows out, litigation runs riot over direct insurers claims, and personal insurance premiums rise. It will be the insurers who then demand commissions be brought back. Market forces will RULE. This will happen, just be patient.

  69. I started my own business 18 months ago. I’m under 30 and don’t see too many people my age in the non-bank space.

    Since I started my non bank dealer group was bought out by a bank. I’m being told my fees will also have to go up too due to fofa.

    So we have to somehow find clients.

    Then If the client non discloses it can
    be our fault.

    Then if their circumstances change within 3 years we now have a best interest duty so we have to re write that policy to our own detriment.

    People become unemployed and change occupations more frequently than generations past.

    Will any dealer group return their split for any clawed back commissions?

    Either reduce the commission or mess with the clawback period. But both?

    If 30% of the premium is embedded in the commission it takes 4 years to earn it back at 120 initial comm

    And if you half commission. It only takes 2 years to pay back so why a 3 year rule?

    I would say that one stakeholder (the adviser) wasn’t considered very well as evidenced by the back lash the AFA is getting.

    AFA probably nailed their own coffin when they make comments like the community wouldn’t of accepted that or best outcome we could get… More like you brought your own lube to the party.

    It’s a liberal govt and afa commissioned the report. You think fryden woke up one day and decided I’m going to legislate what level two private parties are allowed to pay each other?

    I could understand if labour got some isn report but not the way it unfolded. Don’t blame some ASIC report claiming the bogey man was coming so it was better to chop your own leg off just in case they came up with something worse.

    To regain any credibility instead of saying I’m happy but we wanted more. Attack!!! Reject the recommendations in the report categorically. Talk about takeover terms or initial discount periods. Focus on insurer behaviours. Be vocal about Trowbridge and FSC agenda being the same.

    Talk about the problems and dangers of vertical Integration.

    Provide a different voice to the politicians! Going in there as a consensus of course the minister will go ahead with it.

    I would demand we be heard and let him know about the revenge or the friend fund. Does he want us to donate to his campaign or does he want us to donate to everyone but him?

    Seriously anything! Something that says I represent my membership and I’m not just going to go along with the insurers agenda for a cushy executive job later.

    When the CEO of synchron is only one putting his hand up saying this isn’t good makes you think.

    Like some guy above me said better to go down fighting then to just lie down.

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