Advisers\u00a0receiving\u00a0commissions on risk advice will not be required to comply with the opt-in regulations outlined in this weeks’ draft Future of Financial Advice (FoFA) reform legislation.<\/p>\n
Responding to a request by riskinfo for clarification as to whether\u00a0the key opt-in requirements extended to advisers remunerated by\u00a0renewal commissions on risk products,\u00a0the office of\u00a0Financial Services and Superannuation Minister, Bill Shorten<\/strong>, advised:<\/p>\n An ongoing fee to a retail client does not include a commission incorporated into an insurance premium. This means that the opt-in provisions in the Exposure Draft do not apply to the commissions contained within an insurance policy.<\/em><\/p>\n While some elements of the life insurance industry had already made this assumption, many stakeholders\u00a0have been standing by for confirmation that personal risk advice, if remunerated via commissions,\u00a0is effectively removed from the opt-in process.<\/p>\n Naturally, if the adviser also delivers investment\/superannuation,\u00a0retirement income or other advice to the same client, an opt-in process will need to be observed for that component of advice, as it will if the insurance advice relates to group insurance or\u00a0to default or MySuper products.<\/p>\n But while this confirmation will be met with a positive response from many risk-focussed advisers in particular, the industry still awaits more details on how opt-in will operate.\u00a0 It also awaits the impending\u00a0release of the second tranche of the draft FoFA legislation which includes language regarding:<\/p>\n\n