{"id":32393,"date":"2016-02-11T15:02:22","date_gmt":"2016-02-11T04:02:22","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=32393"},"modified":"2016-02-16T16:31:02","modified_gmt":"2016-02-16T05:31:02","slug":"lif-legislation-introduced-into-parliament-2","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2016\/02\/11\/lif-legislation-introduced-into-parliament-2\/","title":{"rendered":"LIF Legislation Introduced Into Parliament"},"content":{"rendered":"<p>The Federal Government has introduced the new Life Insurance Framework legislation into Parliament.<br \/>\n<!--more--><\/p>\n<figure id=\"attachment_31548\" aria-describedby=\"caption-attachment-31548\" style=\"width: 150px\" class=\"wp-caption alignright\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-31548\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2015\/11\/Kelly-ODwyer.jpg\" alt=\"Assistant Treasurer, Kelly O'Dwyer: These changes strike the right balance between consumers of life insurance while recognising the need for business viability and industry stability...\" width=\"150\" height=\"180\" \/><figcaption id=\"caption-attachment-31548\" class=\"wp-caption-text\">Assistant Treasurer, Kelly O&#8217;Dwyer: These changes strike the right balance between consumers of life insurance while recognising the need for business viability and industry stability&#8230;<\/figcaption><\/figure>\n<p>Tabled as the <a href=\"https:\/\/riskinfo.com.au\/news\/files\/2016\/02\/160211-LIF-Legislation.pdf\" target=\"_blank\" rel=\"\"><em>Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016<\/em><\/a>, the legislation will give effect to what Minister for Small Business and Assistant Treasurer, <strong>Kelly O\u2019Dwyer<\/strong>, refers to as what have been industry-agreed life insurance improvements:\u00a0 \u201cIn November last year life insurance peak bodies reached agreement on the implementation of these changes to improve the quality of advice and increase consumer confidence in the life insurance sector,\u201d said Minister O\u2019Dwyer.<\/p>\n<p>In a release announcing the tabling of the legislation, the Minister again referenced one of the underlying principles on which the legislation was drafted, namely the alignment of the interests of all stakeholders in the chain that starts with product manufacturers and end with consumers: \u201cThe legislation builds on the Government\u2019s commitment to better align the interests of financial firms and consumers by addressing the conflicted remuneration arrangements that were exempted under the FOFA reforms for life insurance.<\/p>\n<p>\u201cCurrently life insurance advisers are paid high up front commissions up to 120% of the first year premium with low trailing commissions. This can provide a financial incentive to advisers to replace policies even where there is no consumer benefit,&#8221; added Ms O&#8217;Dwyer.<\/p>\n<p>The Assistant Treasurer confirmed the 1 July 20126 commencement date for the transition to the new arrangements, containing the controversial remuneration arrangements including:<\/p>\n<ul>\n<li>A three-year phase-down of upfront commissions paid to advisers to a maximum of 60 per cent from 1\u00a0July\u00a02018, together with the introduction of a maximum rate for ongoing commissions of 20\u00a0per cent<\/li>\n<li>The introduction of a two year commission \u2018clawback\u2019 period, which will claw back 100 per cent of a commission in the first year and 60\u00a0per\u00a0cent of a commission in the second year should a policy lapse<\/li>\n<\/ul>\n<p>Minister O\u2019Dwyer noted \u201cThese changes strike the right balance between consumers of life insurance while recognising the need for business viability and industry stability.<\/p>\n<h6>if significant improvements are not identified the Government will move to mandate level commissions<\/h6>\n<p>She also confirmed the Government would consult with ASIC on the regulations that will support the legislation &#8220;&#8230; to ensure the reforms are implemented as efficiently and effectively as possible.&#8221; Ms O&#8217;Dwyer said ASIC will be responsible for implementing the commission caps and clawback arrangements, and that it will review the sector in 2018 to determine the effect of the reforms.<\/p>\n<p>The Assistant Treasurer also reaffirmed earlier statements she has made that if significant improvements are not identified the Government will move to mandate level commissions, as recommended by the Financial System Inquiry report.<\/p>\n<p><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2016\/02\/160211-LIF-Legislation.pdf\" target=\"_blank\" rel=\"\">Click here<\/a> to access the <em>Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Government has introduced the new Life Insurance Framework legislation into Parliament.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,270],"tags":[],"class_list":["post-32393","post","type-post","status-publish","format-standard","category-compliance-regulation","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/32393","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=32393"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/32393\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=32393"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=32393"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=32393"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}