{"id":6333,"date":"2010-05-25T16:31:53","date_gmt":"2010-05-25T05:31:53","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=6333"},"modified":"2020-05-20T12:19:21","modified_gmt":"2020-05-20T01:19:21","slug":"adviser-backlash-on-banning-risk-commissions","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2010\/05\/25\/adviser-backlash-on-banning-risk-commissions\/","title":{"rendered":"Adviser Backlash on Banning Risk Commissions"},"content":{"rendered":"

\"Vote<\/a><\/p>\n

Financial advisers have been highly critical of the move to consider banning risk insurance commissions, but the issue of conflict of interest remains.<\/p>\n

Our latest poll question asks:<\/p>\n

Do you believe payment of commissions on risk products represents a conflict of interest to the consumer, real or perceived?<\/em><\/strong><\/p>\n

Our poll is based around\u00a0statements made\u00a0by the Financial Services Minister, Chris Bowen<\/strong>,\u00a0on the question of\u00a0banning risk insurance commissions.<\/p>\n

Mr Bowen’ statements were made as part of the announcement last week of the Government’s industry consultation process for its Future of Financial Advice<\/a> reforms, which\u00a0Mr Bowen has said will include discussion about whether to extend the ban on conflicted remuneration structures to risk insurance.<\/p>\n

Our article last week on the Government’s industry consultation agenda sparked a\u00a0passionate response from advisers who were highly critical of the prospect of banning commissions on risk products, many\u00a0challenging Mr Bowen to spend more time with\u00a0advisers, in order for him to better understand the nature of life insurance and how, in reality,\u00a0it must be sold, not bought.<\/p>\n

Mr Bowen … must address the issue of conflict of interest, real or perceived, from the point of\u00a0view of the consumer<\/h6>\n

Mr Bowen told an industry audience last week\u00a0he accepts\u00a0that banning risk commissions may indeed have an adverse impact on underinsurance, but at the same time, his Government must address the issue of conflict of interest, real or perceived,\u00a0from the point of view of the consumer.<\/p>\n

So, while advisers have presented a good case about the potential damage that could be caused by banning commissions on risk products, has enough consideration been given to addressing the other side of the coin, namely the issue of conflict of interest?<\/p>\n

The issue of conflict of interest in relation to adviser remuneration has been brought into focus mainly by well-documented collapses of financial services firms, which have wiped out the long-term savings of thousands of Australians, but where risk insurance commissions were not a factor.<\/p>\n

The Government is now considering whether the banning of all commissions, including risk insurance commissions, will lead to the development of greater public confidence in the financial advice sector.\u00a0 In relation to\u00a0commission on risk products, Mr Bowen appears to be considering the trade-off between a blanket banning of\u00a0all commissions and the greater public confidence that may be generated, against the potential worsening of the underinsurance dilemma.<\/p>\n

One adviser last week did put forward his suggestions as to\u00a0how to remove conflict of interest on risk commissions:<\/p>\n

1. Remove APL restrictions and force all dealer groups to allow advisers access to all players in the market.<\/em><\/p>\n

2. Ban commission overide payments to dealer groups based on volume. Maybe that will force some groups out or adviser splits up, who knows.<\/em><\/p>\n

3. Place a longer responsibility period on the cover, only for re-writes to another company and not client cancellations.<\/em><\/p>\n

What is your view about conflict of interest in relation to risk insurance commissions?\u00a0 There is a solid\u00a0argument about how banning risk commissions may worsen the underinsurance crisis, but what are your views on the other side of the coin?\u00a0 As the Government consults with the industry on this question, this is a key moment to have your voice heard…<\/p>\n

\"Vote<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Financial advisers have been highly critical of the move to consider banning risk insurance commissions, but the issue of conflict of interest remains.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270],"tags":[],"class_list":["post-6333","post","type-post","status-publish","format-standard","category-compliance-regulation","category-polls","category-remuneration","headers-new"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/6333","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=6333"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/6333\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=6333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=6333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=6333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}