{"id":72709,"date":"2024-08-06T17:11:46","date_gmt":"2024-08-06T07:11:46","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=72709"},"modified":"2025-03-14T12:02:20","modified_gmt":"2025-03-14T01:02:20","slug":"time-to-review-lif-commission-caps","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2024\/08\/06\/time-to-review-lif-commission-caps\/","title":{"rendered":"Time to Review LIF Commission Caps"},"content":{"rendered":"<div id=\"polls-328\" class=\"wp-polls\">\n\t\t<div class=\"pollHeader\"><strong>Law-makers should reconsider the commission caps presently mandated under the Life Insurance Framework reforms.<\/strong><\/div><div id=\"polls-328-ans\" class=\"wp-polls-ans\"><ul class=\"wp-polls-ul\">\n\t\t<li>Agree <small>(92%)<\/small><div class=\"pollbar\" style=\"width: 92%\" title=\"Agree (92% | 394 Votes)\"><\/div><\/li>\n\t\t<li>Disagree <small>(5%)<\/small><div class=\"pollbar\" style=\"width: 5%\" title=\"Disagree (5% | 23 Votes)\"><\/div><\/li>\n\t\t<li>Not sure <small>(2%)<\/small><div class=\"pollbar\" style=\"width: 2%\" title=\"Not sure (2% | 9 Votes)\"><\/div><\/li>\n\t\t<\/ul><div style=\"text-align: center\"><\/div><\/div>\n\t\t<input type=\"hidden\" id=\"poll_328_nonce\" name=\"wp-polls-nonce\" value=\"23446a71d4\" \/>\n<\/div>\n\n<div class=\"header row\">\n<div class=\"intro\">\n<h3>The vexed question of life insurance commission caps naturally resonated very strongly with our adviser audience this week&#8230;<\/h3>\n<\/div>\n<\/div>\n<p>Latest <a href=\"https:\/\/riskinfo.com.au\/news\/2024\/08\/01\/financial-complaints-reach-record-105000-in-2023-24\/\" target=\"_blank\" rel=\"noopener\">complaints data<\/a> released by AFCA lends weight to the argument that consumer issues relating to the quality of life insurance advice are almost non-existent.<\/p>\n<p>This in turn supports the contention held by what is anecdotally a significant proportion of the financial advice community that the Life Insurance Framework commission caps are unfair and unjustified and should be reconsidered as a matter of priority.<\/p>\n<p>The following slide prepared by AFCA as part of its presentation at <a href=\"https:\/\/riskinfocus.com.au\/\" target=\"_blank\" rel=\"noopener\">Riskinfocus 24<\/a> reports a grand total of 50 life insurance advice complaints recorded by the authority for the seven-month period between 1 July 2023 and 31 January 2024:<\/p>\n<figure id=\"attachment_72717\" aria-describedby=\"caption-attachment-72717\" style=\"width: 1414px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-72717\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide.png\" alt=\"\" width=\"1414\" height=\"773\" srcset=\"https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide.png 1414w, https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide-300x164.png 300w, https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide-1024x560.png 1024w, https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide-768x420.png 768w, https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide-696x380.png 696w, https:\/\/riskinfo.com.au\/news\/files\/2024\/08\/240806-AFCA-Slide-1068x584.png 1068w\" sizes=\"auto, (max-width: 1414px) 100vw, 1414px\" \/><\/a><figcaption id=\"caption-attachment-72717\" class=\"wp-caption-text\">Life Insurance Complaints received by AFCA 1\/7\/23 &#8211; 31\/1\/24. Source: AFCA<\/figcaption><\/figure>\n<p>Although this data only relates to a seven-month period, readers may want to compare these numbers against the 105,454 complaints received by AFCA in the 12-months spanning the 2023\/24 financial year (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2024\/08\/01\/financial-complaints-reach-record-105000-in-2023-24\/\" target=\"_blank\" rel=\"noopener\">Financial Complaints Soar Beyond 100,000<\/a>).<\/p>\n<p>Clearly, the quality of life insurance advice as an issue for consumers, relative to the huge number of complaints received by AFCA, is infinitesimally small. And readers should also note that of the 50 life insurance advice complaints received during the seven-month period documented above, more than half (60%) were resolved by AFCA in favour of the financial firm.<\/p>\n<p><strong><em>Note to ASIC and The Treasury: The quality of life insurance advice in Australia is not an issue!<\/em><\/strong><\/p>\n<p>Consumer groups and others who support the retention of the 60\/20 commission caps mandated under the LIF reforms can potentially argue that the reason the quality of life insurance advice is not an issue today is, in fact, due to the LIF commission caps being enforced in the first place.<\/p>\n<p>More data needs to be reviewed in order to consider this question in greater depth. However, if a record of life insurance product-related complaints received by AFCA can act as a rough guideline (as opposed to life insurance advice complaints), AFCA annual reports dating back to 2018 &#8211; the year in which the authority was established &#8211; have only ever documented a very minor proportion of all complaints submitted as relating to life insurance (ie around 1% &#8211; 2%).<\/p>\n<blockquote><p>The mass exodus of risk-focussed financial advisers &#8230;has been well-documented<\/p><\/blockquote>\n<p>The mass exodus of risk-focussed financial advisers coinciding with the implementation of the LIF reforms and minimum education standards has been well-documented, as has the collapse in life insurance new business volumes.<\/p>\n<p>Many groups have suffered as a result of the implementation of the 60\/20 commission caps including advisers, advice businesses and life companies, as have many thousands of Australians through their inability to access much needed life insurance advice, especially low-to-middle income earners.<\/p>\n<p>What will serve the greater good? What is the likelihood that if commission caps were revised to, say, 80\/20, this would somehow trigger an explosion of poor quality life insurance advice in Australia?<\/p>\n<p>This is a question for Riskinfo readers to ponder, together with the multitude of other &#8216;what if&#8217; scenarios that would inevitably accompany a review of the LIF commission caps and the two-year responsibility period.<\/p>\n<p>Surely it&#8217;s time to start asking the question.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The vexed question of life insurance commission caps naturally resonated very strongly with our adviser audience this week&#8230; Latest complaints data released by AFCA lends weight to the argument that consumer issues relating to the quality of life insurance advice are almost non-existent. This in turn supports the contention held by what is anecdotally a [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":72721,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270,8291],"tags":[],"class_list":{"0":"post-72709","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-compliance-regulation","8":"category-polls","9":"category-remuneration","10":"category-story-of-the-week"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/72709","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=72709"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/72709\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/72721"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=72709"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=72709"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=72709"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}