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).
How about Industry Super commissions received, bet the Labor party are happy to let those continue. What a joke the double standards are and getting wider by the day.
Rule number One.
Ignore what a politician tells you they are going to do.
They change their minds like the wind.
Labor was 100 percent banning the mortgage brokers commissions until the mortgage Industry did what the Life Industry should have done, by uniting and explaining what will happen to consumers in a clear and concise way if commissions were banned.
In a blink of an eye, Labor changed their mind.
Labor or Liberal, they are the same. A bunch of people pretending they understand and have the answers, when we all know they understand very little and just make it up as they go along.
A lesson should be learned by the Life Industry in how to win when dealing with Politicians.
First, tell the truth, something that has been lacking from the Life Industry and their mouthpiece the FSC since day one.
Second, tell the truth.
Third, clearly articulate what the implications are to bad regulation and listen to the people who since day one, were ignored, which were the Australian public and expert advisers who are at the Coalface and had the answers.
Jeremy one of the reasons why mortgage brokers partly changed the mind of the Labor Party was due to the lobbying of the Industry Funds bank, ME Bank. We don’t have a similar ally in this battle!
Mortgage Brokers were successful in getting the government AND opposition to disregard the Royal Commission’s recommendation to ban upfront and trail commissions because the public would have been worse off and winners would have been the big banks.
Mortgage Brokers succeeded because their two main associations worked TOGETHER and got the support of small banks and non-bank lenders both in terms of funding and resources.
Can the AFA and FPA PLEASE work together with the insurers to meet with the Treasurer Josh Frydenberg and the Financial services ministerial team to help them/ get them to understand that the logic is identical when it comes to the Royal Commission’s recommendation to ban Personal Insurances commissions because in this instance the big winners will be the superannuation funds whose insurance cover is typically more expensive and provides less cover and the losers will be the consumer who is not willing or unable to pay a fee for service for good financial and risk advice.
Various insurers individually putting up with whitepapers to state why banning commissions is bad for the public, has limited effectiveness.
The FPA rolling over and saying “we support the Royal Commission’s recommendations” is counterproductive to the cause.
What is needed is a united effort led by the two main associations with the financial and resource support of insurers, to help the government understand the harm that banning insurance commissions will cause and why the Royal Commission’s recommendation recommendation to ban upfront and trail commissions is NOT in the public’s best interest!
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