Convince Us On Commissions – Labor


Shadow Assistant Treasurer and Shadow Minister for Financial Services and Superannuation Stephen Jones has conceded that there are some areas where a prima facie position on conflicted remuneration is not the most practical position for the consumer.

Speaking at the 2021 FSC Life Summit last week, Jones told attendees that the Banking Royal Commission set quite clearly a prima facie position on conflicted remuneration, a position he said he finds “compelling”.

“Of course, we have found some areas where the prima facie position is not necessarily the most practical and best position,” he said, noting that mortgage brokers were able to make a case to Government and to the Opposition that “…with the right sorts of protections surrounding that payment mechanism, consumers could get a good deal, we’d have more competition in the market and the remuneration structures, appropriately adjusted, could continue.”

Stephen Jones…we are available to have a conversation about how we get this right…

He also told the summit that Labor will not preempt the outcome of the Government review into life insurance but he wanted to say “…quite clearly to the industry that we are available to have a conversation about how we get this right”.

“There is a prima facie position, there has been been some exceptions… we’re giving you the opportunity, from our point of view,  to convince us that we can do this, perhaps in a modified way, in a way that ensures we have sustainability of life insurance and the retail distribution of life insurance products.”

…the first challenge is not around the remuneration, but around the value of the product the industry is selling…

Later, during a Q&A session, Jones was asked what the industry could do to convince him around remuneration models and why there is a consumer benefit to take a different approach to that discussed by the Royal Commission?

He told the summit that the first challenge is not around the remuneration, but around the value of the product the industry is selling.

He said the first challenge for the industry is to be clearly articulating why Australian consumers need the product it is selling. “Unless you get over that  hurdle, how you remunerate people for selling that product is a second or third order issue.

“So when you are able to prove the value, and it should be up there with car, house and health insurance – if you’re able to get over that hurdle you are then into the space of saying what’s the most efficient means of delivering that product to people.”

“And how can you do it in a way that protects consumers and ensures they pay the price of delivering that to them in the most efficient way.”

…from an economists point of view this cost issue is a bit like squeezing a balloon…

Jones says that from an economists point of view this cost issue is a bit like squeezing a balloon, you might grab that bit where commissions are writ, and once grabbed and squeezed, the cost has flown to some other part of the balloon.

“So the cost of distributing a product is going to be borne somewhere. The question is how do you do that in the best way that removes all the very unsatisfactory incentives, poor selling practices and churn practices?

“How do you remove all of those negative consequences of poor selling practices at the same time as delivering a product and ensuring the costs of delivering that product are appropriately met,” he said.

Stephen Jones MP, Shadow Assistant Treasurer & Shadow Minister for Financial Services and Superannuation, addresses delegates at the 2021 FSC Life Insurance Summit …convince us that we can do this


    Yet somehow fully disclosed and personal Life Insurance advice commissions are wrong.
    Industry Super Intra Fund Advice paid for by Hidden Commission (called admin fees) that are paid for by every fund member when very few get Advice = massive hidden commissions for NO Service to most Industry Fund members.
    Members cannot even opt out of these Hidden Commissions.
    Vertically integrated sales for Industry Super, no BID, no FARSEA compliance and ALL paid for via Hidden Commissions.
    What an absolute sad joke is this clown.

  2. This article explains why these politicians are happy to sink the insurance industry – they do not see any value in Risk insurances.

    How can these people be in any position to be making any comments re this industry when they obviously have no concept of what we do. Seriously for this “person” to say that we need to convince them that the value of risk insurance is “up there” with the value of car insurance. Does he even know what life or income protection insurance is? I kind of doubt it.

    It shows just how ineffectual the in FPA and AFA lobby groups are if they cannot covey this simple concept.

  3. There is no such thing as Churn…… Its now called ‘Client best interest’ as soon as this was introduced meant if there is a cheaper policy even after 12 months then you must offer this to the client. If you see this as churn tell me this…. if there is a policy $1,000 p.a. cheaper for the exact policy. should I a) not offer to client and keep where he is? b) offer the client and move if he wants to? (clawback will occur) c) keep him there as I earn more renewal commission? but if I move I will be clawed back 100% of the 66% commission and then make the 66% again but have to do all the work again – original work still not paid in this senario as been clawed back and new clawback period starts…. what an absolute debarcle this industry has become. The legislators believe that Financial planner dont deserve to earn an income anymore – resulting in less Australians getting affordable quality advice from a planner – You have to be rich to get advice these days – well done.

  4. My impression is that Mr Jones is currently “walking back” his hard-nosed position on life risk commissions as expressed at the AFA conference. As to why he would do that when the industry funds, the main complainers about life risk commissions, are now also one of the Labor Party’s significant source of electoral funding, is a little puzzling.
    Yesterday’s news that the default cover in industry funds had reduced by 20%, as a result of the government’s legislation allowing young people to opt out easily, may have had something to do with it. Some of the profit is gone from the insurers in the default game because of that policy and perhaps, just perhaps, some of those life insurers in the super insurance game may have whispered in Mr Jones’s ear that, in order for them to be “competitive” in supplying cheap default cover to his Trustee mates, there actually needs to be an increase in advised retail life risk for young lives.
    LIF at 66% is not covering what it costs to advise a simple life risk sale of some term and trauma and maybe IP for a young life. Unless that is fixed, those Number 1 F unds will be starved of fresh new fully underwritten retail risk, and that will be a disaster for cheap default cover.
    Of course, Mr Jones also knows that the LIF review has gone from ASIC to Treasury, and you can add another 24 months before we see the result. So our boy has got a little room to move but still leaves himself enough wriggle room if, heaven help us, Treasury decides to restore LIF to 88/22

  5. Stephen Jones’ robotic talking points eerily echo horrifically conflicted unionised industry funds. This is part of a continued attack on the private sector and middle class Australia. This has nothing to do with “consumer outcomes”.

    This rhetoric won’t stop until welfare dependency on governments (the lifters) results in a greater socialist voter base.

    Sadly for the likes of Jones and his party, immigration has halted the growth in the Labor/Green support units, so now it’s about converting those teetering on the edge of broke, into dependents of a “much needed socialist regime”.

    • Who exactly are the learners? I could have sworn the likes of Gerry Harvey and Solomon Lew pocketed millions from job keeper. That is called welfare dependency.

  6. Bernie Ripoll (ex- Labor MP and architect of FoFA) has been employed to lobby for the retention of commissions along with Nathan Rees ex – Labor NSW Premier. These 2 should be asked to speak to Stephen Jones now and educate him on the realities of the Australian Life Insurance industry. May be that may lead to a change of tone from him?

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