{"id":6471,"date":"2010-06-01T23:19:57","date_gmt":"2010-06-01T13:19:57","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=6471"},"modified":"2020-02-06T08:10:36","modified_gmt":"2020-02-05T21:10:36","slug":"no-conflict-in-risk-commissions","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2010\/06\/01\/no-conflict-in-risk-commissions\/","title":{"rendered":"No Conflict in Risk Commissions"},"content":{"rendered":"

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

The vast majority of advisers say the payment of commissions for risk advice represents\u00a0no conflict of interest to the consumer.<\/p>\n

As our story goes to press, 85% of the many hundreds of advisers who have taken part in our poll\u00a0believe there is no conflict of interest, real or perceived, in paying commissions on\u00a0risk products.\u00a0 Only 6% believe\u00a0a conflict does exist,\u00a0while 9%\u00a0believe a conflict can exist\u00a0sometimes (see: Adviser Backlash on Banning Risk Commissions<\/a>).<\/p>\n

While the large majority of advisers believe\u00a0conflict of interest does not exist on risk commissions, there have still been many suggestions made as to how the current system can be advanced.<\/p>\n

For example, many advisers have commented that if commissions were standardised, this would remove any temptation to place business with a particular insurer for additional financial gain.<\/p>\n

Some\u00a0advisers have taken this argument a step further, calling not just for standardising commissions, but also for the removal of upfront commissions.\u00a0 In addition to\u00a0removing product preferences based on\u00a0remuneration, it is argued this would also have the effect of substantially reducing the practice of churning\u00a0policies.<\/p>\n

On another level, the risk store’s Sue Laing<\/strong> points out that at claim time, when the policy counts most, it is the level of cover and the product mix that will have an impact on the claim outcome and that any conflict of interest, real or perceived, would play virtually no role in any case:<\/p>\n

… in 99.9% of claim situations there is no retrospective proof that the client was sold the \u2018wrong’ product.\u00a0 There is no such thing as a bad product. … even if an adviser sells Company X’s product rather than Company Y’s, it will NOT be to any recognisable detriment of the client.”<\/em><\/p>\n

Ms Laing adds, “But not selling the right sums insured and product mix WILL be to their detriment.\u00a0 Commissions or no commissions will have ZERO effect on that outcome.”<\/em><\/p>\n

Other advisers have called for a level playing field, arguing that related sectors such as general insurance, mortgage broking, share broking and\u00a0real estate services are no different in terms of potential conflict of interest.<\/p>\n

However, Financial Services Minster, Chris Bowen <\/strong>has indicated that while the Future of Financial\u00a0Advice<\/a> reform measures are focussed on the authorised providers of financial advice, he will in future be turning his attention to other areas.<\/p>\n

A number of advisers have suggested that when it comes to risk insurance commissions, any conflicts of interest exist at the dealer group level, and not with individual advisers.\u00a0 This point of view argues for:<\/p>\n