{"id":34736,"date":"2016-09-27T21:50:34","date_gmt":"2016-09-27T11:50:34","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=34736"},"modified":"2016-09-28T07:25:15","modified_gmt":"2016-09-27T21:25:15","slug":"latest-poll-commission-clawbacks","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2016\/09\/27\/latest-poll-commission-clawbacks\/","title":{"rendered":"Latest Poll &#8211; Commission Clawbacks"},"content":{"rendered":"<div id=\"polls-168\" class=\"wp-polls\">\n\t\t<div class=\"pollHeader\"><strong>Should life insurance policies cancelled in the best interests of the client be subject to clawback provisions?<\/strong><\/div><div id=\"polls-168-ans\" class=\"wp-polls-ans\"><ul class=\"wp-polls-ul\">\n\t\t<li>No <small>(85%)<\/small><div class=\"pollbar\" style=\"width: 85%\" title=\"No (85% | 289 Votes)\"><\/div><\/li>\n\t\t<li>Yes <small>(12%)<\/small><div class=\"pollbar\" style=\"width: 12%\" title=\"Yes (12% | 42 Votes)\"><\/div><\/li>\n\t\t<li>Not sure <small>(3%)<\/small><div class=\"pollbar\" style=\"width: 3%\" title=\"Not sure (3% | 10 Votes)\"><\/div><\/li>\n\t\t<\/ul><div style=\"text-align: center\"><\/div><\/div>\n\t\t<input type=\"hidden\" id=\"poll_168_nonce\" name=\"wp-polls-nonce\" value=\"8a4006e518\" \/>\n<\/div>\n\n<p>Our latest poll asks you to consider the fairness of the clawback provisions proposed in the soon-to-be tabled Life Insurance Framework legislation (Mark 2).<\/p>\n<p><!--more-->We appreciate there exists a number of issues in relation to the commission clawbacks proposed under LIF, but for the purpose of this poll our focus is on the proposition that it is inherently unfair for advisers to be penalised for conduct intended to serve the best interests of their clients (see:\u00a0<a href=\"https:\/\/riskinfo.com.au\/news\/2016\/09\/27\/afa-calls-for-best-interest-lapses-to-be-clawback-exempt\/\" target=\"_blank\">AFA Pushes For Clawback Exemption on Best Interest Lapses<\/a>).<\/p>\n<p>When this poll question is posed to a group that mainly comprises financial advisers, it might be expected that the &#8216;No&#8217; response would garner most votes. For the purpose of balance, therefore, we offer arguments both for and against the proposition.<\/p>\n<p><strong>The &#8216;No&#8217; Vote<\/strong><\/p>\n<p>This is the easier argument to advance. The &#8216;No&#8217; vote is associated with those advisers who believe there is a fundamental &#8216;disconnect&#8217; that exists if they are financially penalised for doing the right thing, that is, replacing a life insurance policy in the first two years if it is in their client&#8217;s best interests.<\/p>\n<p>It can also be argued that the clawback provisions as proposed in version one of the LIF legislation are contrary to the philosophical aims of the reforms as stated by succeeding Financial Services Ministers Frydenberg and O&#8217;Dwyer. Both have used language and phrasing in support of the proposed reforms in terms of aligning the interests of all stakeholders, including product manufacturers, advisers and consumers. So, how can financially penalising well-intended advisers who are serving their clients&#8217; best interests possibly come close to &#8216;aligning the interests of all stakeholders&#8217;?<\/p>\n<p><strong>The &#8216;Yes&#8217; Vote<\/strong><\/p>\n<p>The &#8216;Yes&#8217; vote argues that a minority of advisers may seize on such an exemption to generate additional replacement policy activity simply because they will not be subject to commission clawbacks if the &#8216;best interests&#8217; scenario is invoked.<\/p>\n<p>Another (and related) argument in support of excluding the &#8216;best interests&#8217; test from clawbacks is the difficulty associated with developing an objective process that can consistently determine whether the exemption submission is valid. In other words, a &#8216;best interests&#8217; clawback exemption may become an administrative nightmare for advisers, licensees, product manufacturers and regulators.<\/p>\n<p>LIF legislation &#8216;Mark One&#8217; detailed the current exemptions on which commission clawbacks would not apply:<\/p>\n<ul>\n<li>Age-expiry<\/li>\n<li>Self-harm<\/li>\n<li>Suicide<\/li>\n<li>Health improvement<\/li>\n<\/ul>\n<p>Should &#8216;client best interests&#8217; become another line in this commission clawback exemption list? As usual, it&#8217;s now over to you to continue this conversation. Tell us what you think&#8230;<\/p>\n<p><strong><em>Note to Advisers:<\/em><\/strong><\/p>\n<p><strong><em>We welcome your comments and in the interest of fairness, request that you properly identify yourself either in your post ID or at the end of each comment.<\/em><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Our latest poll asks you to consider the fairness of the clawback provisions proposed in the soon-to-be tabled Life Insurance Framework legislation (Mark 2).<\/p>\n","protected":false},"author":3,"featured_media":34767,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[4247],"class_list":["post-34736","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","category-polls","category-remuneration","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/34736","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=34736"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/34736\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/34767"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=34736"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=34736"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=34736"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}