{"id":35733,"date":"2017-01-16T11:30:15","date_gmt":"2017-01-16T00:30:15","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=35733"},"modified":"2025-09-02T11:34:30","modified_gmt":"2025-09-02T01:34:30","slug":"inconsistent-lif-regulations-create-loop-holes","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2017\/01\/16\/inconsistent-lif-regulations-create-loop-holes\/","title":{"rendered":"Inconsistent LIF Regulations Create Loopholes"},"content":{"rendered":"<p>The draft regulations for the Life Insurance Framework legislation need further clarification, according to a lawyer operating within the financial services sector who has claimed the regulations create loopholes around clawback and conflicted remuneration.<br \/>\n<!--more--><\/p>\n<figure id=\"attachment_35734\" aria-describedby=\"caption-attachment-35734\" style=\"width: 150px\" class=\"wp-caption alignright\"><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2017\/01\/IMcD.jpg\" rel=\"attachment wp-att-35734\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-35734\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2017\/01\/IMcD.jpg\" alt=\"Imac legal and compliance Principal Lawyer, Ian McDermott \" width=\"150\" height=\"150\" \/><\/a><figcaption id=\"caption-attachment-35734\" class=\"wp-caption-text\">imac legal and compliance Principal Lawyer, Ian McDermott<\/figcaption><\/figure>\n<p>imac legal and compliance Principal Lawyer, <strong>Ian McDermott<\/strong> said inconsistencies in the treatment of clawback may allow advisers to circumvent the rules by rebating clients to retain their policies.<\/p>\n<p>\u201cIt appears possible the clawback provisions may be avoided by merely engaging in an ongoing program of \u2018rebates\u2019 to clients, no matter how minimal the rebate so long as the rebate was applied in order to induce the client to acquire or continue to hold, the product,\u201d McDermott said, in a blogpost on his company\u2019s website\u00a0(<a href=\"http:\/\/imaclegal.com.au\/latest-lif-changes-holes-swiss-cheese\/\" target=\"_blank\">available\u00a0here<\/a>).<\/p>\n<p>\u201cThe new LIF rules still allow this as well as where a \u2018discount\u2019 is applied to a policy for the same purpose,\u201d he said.<\/p>\n<h6>&#8220;The LIF rules contain clawback provisions but give no regulatory guidance as to how those rules are to apply\u2026&#8221;<\/h6>\n<p>He was also critical of the failure of the draft regulations to provide clarity around how clawback would apply when there had been a change of adviser or licensee between the commencement of a policy and cancellation and clawback.<\/p>\n<p>\u201cThe LIF rules contain clawback provisions but give no regulatory guidance as to how those rules are to apply\u2026The new rules do allow for ASIC to make rules that could cover such requirements so let\u2019s hope they do spell out the requirements,\u201d McDermott said.<\/p>\n<p>\u201cHowever, in imac legal\u2019s view, given this is such an integral issue, appropriate rules should have been included in either the Act or Regulations.\u201d<\/p>\n<p>McDermott also said the application of conflicted remuneration was \u2018anomalous\u2019 in the regulations with commissions paid to advisers under the new upfront\/ongoing commission model not considered as conflicted remuneration while commissions paid in relation to life insurance without advice would be considered as conflicted remuneration even when they fit within the new commission model.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The draft regulations for the Life Insurance Framework legislation need further clarification, according to a lawyer operating within the financial services sector who has claimed the regulations create loopholes around clawback and conflicted remuneration.<\/p>\n","protected":false},"author":3,"featured_media":35788,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8294,8,4,270],"tags":[4247],"class_list":["post-35733","post","type-post","status-publish","format-standard","has-post-thumbnail","category-claims","category-compliance-regulation","category-products","category-remuneration","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/35733","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=35733"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/35733\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/35788"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=35733"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=35733"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=35733"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}