The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will consider whether life insurance commissions should be exempt from the ban on conflicted remuneration, despite the issue not being raised during hearings.
In closing remarks made to the Commission at the end of two weeks of hearings into the financial advice sector Senior Counsel Assisting the Commission, Rowena Orr QC invited parties that had leave to appear at the Commission to make submissions on a range of topics including the management of conflicts of interest and the ban on conflicted remuneration.
Orr said at the start of the two week block of hearings, which ended last week, the Commission was provided with a number of statements that dealt with these issues and parties that were to provide written submissions should address a number of questions based on those statements.
“…should the statutory carve-outs to the ban on remuneration, including…insurance commissions, be maintained…”
On the matter of life insurance, Orr said the question to be addressed was “…should the statutory carve-outs to the ban on remuneration, including the recent carve-out in relation to insurance commissions, be maintained”, adding “If so, why?”
The issue of vertical integration was also addressed with parties making submissions asked to address whether financial advisers can manage conflicts of interest associated with providing advice as a representative of an institution that also manufactures financial products.
Orr also called for parties to comment on the regulatory and disciplinary regime of financial advisers asking if the current system was sufficient to prevent misconduct or if there were gaps between the oversight provided by regulators and licensees.
Additionally, Orr asked if a system of licensing at both an individual and an entity level be more appropriate than the existing system of licensing only at the entity level.
Commissioner Kenneth Hayne said the submissions were to be limited to 35 pages and received by the Commission by 4pm on 7 May. He also invited written responses of between 20 to 30 pages from AMP, CBA, NAB, Westpac, ANZ (see: AMP, Banks May Face Criminal Charges Over Advice Failings) and Henderson Maxwell regarding the case studies heard by the Commission during the course of the hearings (see: Award Winning Practice May Face Criminal Charges).