The evolving position being adopted by the Federal Opposition around the future of risk commissions – as outlined by Shadow financial services minister, Stephen Jones at the 2021 AFA Evolve Conference – was far and away the most-read story by advisers this week. No, this is not the Government speaking – but as opinion polls in recent months indicate a significant swing to Labor in the lead-up to the next Federal Election, the views of the Opposition become even more critical over time…
Shadow financial services minister, Stephen Jones, has signalled a softening in the Opposition’s position on the future of life insurance commissions.
Speaking on the opening day of the 2021 AFA Evolve Hybrid Conference, the shadow minister told AFA GM Policy & Professionalism, Phil Anderson, that his meetings with industry representatives and specialist risk advisers over the last 18 months has served to influence his thinking around risk commissions.
Responding to a question about the timing of the release of Labor’s financial advice policy platform in the lead-up to the next Federal Election, Jones said the Opposition wasn’t going to pre-empt the outcome of the impending review of the quality of life insurance advice (now contained within the Treasury’s review of the overall quality of financial advice). At the same time, however, the shadow minister noted that following a number of “…good, good discussions with risk advisers over the last 12 to 18 months”, those conversations had challenged some of his initial views in this area.
Directly following this observation, Jones reflected also on the need to balance the need for consumer protection with the need to retain a financially-viable financial advice industry.
…the message from the shadow minister …was clearly more nuanced than his message at the same event a year ago
While he made no commitments, noting there were more discussions still to be conducted, the message from the shadow minister on the future of conflicted remuneration was clearly more nuanced than his message at the same event a year ago, at which he said the provision of advice must be de-coupled from the sales process, which means the prohibition of commissions. While he said at the 2020 AFA Vision Conference that he was open to dialogue on the question of risk commissions, he added that he was starting with a bias against it (see: ALP Inclined to Ban Risk Commissions).
Almost 12 months on, both the tone and body language displayed by the shadow minister appeared more conciliatory, which appears to be consistent with a gradual evolution in the language used by Jones when reflecting on the future of risk commissions.
From his position at the 2020 AFA Vision Conference of being inclined to ban risk commissions, this narrative evolved by April 2021 at this year’s FSC Life Insurance Conference to challenging the industry to convince the Opposition of the merits of retaining risk commissions. He told the FSC conference delegates that while the Banking Royal Commission quite clearly set a prima facie position on conflicted remuneration, the Opposition had found some areas where the prima facie position is not necessarily the most practical and best position (see: Convince Us On Commissions – Labor).