The future of risk commissions was highlighted this week following comments made by the shadow minister for financial services. Interestingly, the shadow minister’s comments around the future of risk commissions were not included in his prepared notes that were distributed to media ahead of his speech…
Shadow financial services minister, Stephen Jones, has confirmed Labor’s approach towards retaining risk commissions has changed as a result of deep engagement with the financial services sector.
The shadow minister took the opportunity at a Financial Services Council event in Sydney this week to emphasise that a Labor Government would be committed to working with the FSC and other industry stakeholders when issues emerge in the sector. He said that, just as there had been better results and better legislation outcomes over the last four years by Labor deeply engaging with the industry – by consulting and by listening – if the ALP forms Government it will get better results as legislators by doing exactly the same.
To illustrate his point, Jones referenced his own ‘journey’ in terms of his stance on retaining life insurance commissions.
I concede actually that there are more sides to this story than I originally thought…
He told his audience of his experience over the last four years when addressing a problem (conflicted remuneration) from a point of view of principle or theory “…and by deep engagement with the sector, I concede actually that there are more sides to this story than I originally thought.”
Jones said he spoke at a similar event about three years ago in the immediate aftermath of the Financial Services Royal Commission: “We spoke about the issue of commissions in the sale of financial products – particularly life insurance products. I was starting from a position that was espoused by [Kenneth] Hayne and I can honestly say that after a deep engagement within the industry I see that it’s not as simple as that.”
Jones signalled his softened approach towards risk commissions in September last year at the AFA 2021 Evolve Conference, at which he 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. He also reflected at the time on the importance of balancing the need for consumer protection with the need to retain a financially-viable financial advice industry (see: ALP Softens Position on Future of Risk Commissions).
This week’s comments made by the Shadow minister follow statements made last week by FSC CEO, Blake Briggs, in which he re-affirmed the FSC would advocating to retain life insurance commissions as one element in its agenda to drive down the cost of financial advice (see: FSC Reinforces Support for Risk Commissions).
The three most powerful words in the English language when getting into a debate or argument about a certain stance or philosophy an opponent is taking and one where you can quickly cut through the hubris are; What, Why and How.
What is the problem? Why is it a problem? How did you determine it to be a problem?
Stephen, to his credit, has listened and has taken on board valid arguments that have proven commission is the only viable way forward if the current under-insurance and policy premium increases epidemic, has a chance to be resolved.
If commission goes, so does the Advised Life Insurance sector and this is not theory, it is fact.
There are other urgent issues that must also be addressed to enable the Industry to recover and grow, which are to reduce the time, cost and risk to provide advice and ongoing service, something that we are working towards.
Hands up if you believe this LABOR politician as you watch his mouth move. Does the concept of saying anything to get re-elected ring any bells with you? If he championed commissions for the industry, post election win, he’d be eviscerated by the labor unions and ‘bought-an-paid-for industry super fund elite. Fact. The simple fact he not clearly stated he will retain commissions is a significant red flag. He’s speaking around it with superlatives, saying he is in favour of being “deeply engaged” and other such corporate dribble speak. He says NOTHING he can’t credibly back out of after election day. he’s a politician after all! Read it again, you’ll see.
He makes absolutely NO commitment to keep commissions, instead committing to stay ‘involved’ and emphasizing such platitudes as “importance of balancing the need for consumer protection with the need to retain a financially-viable financial advice industry”. No commitment whatsoever, only politically driven expedient vote-garnering dribble speak.
You know the PM was called a liar by the French President in one of the largest global political slap downs in modern history, right? Macron is also a Conservative so it wasn’t about the colour of his tie.
Your point about reelection applies to both parties. But if you didn’t learn from the first time you put your hand on the stovetop, you’re not going to learn from the second time, are you?.So please tell me – how exactly have commissions and the industry faired under the Liberal government?
I hear you Don. I am not saying that liberal will definitely give us a better deal than labor. I honestly don’t know how good or bad it will be under liberal. What I do know for fact, however, is that it IS guaranteed that labor IS in bed with industry funds AND that love affair will likely continue AND that they will have worked with the unions to get their way and use their unbridled relationship with unions to get anti-business issues resolved THEIR way.
I suppose it comes down to the lesser of 2 evils with libs and labor. I’d love to turn to one of the independents and give them my vote but – there ya go – again, one of the 2 big parties will get their preference. Don, I’m too old, fat and ugly to worry about this nonsense and how it affects commissions, compliance/red tape and my livelihood anymore. That’s exactly why I retired last December after 36 years. I truly wish all brave enough who remain, ESPECIALLY the pure risk writers, the very best of luck as they will surely need it.
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