{"id":72856,"date":"2024-08-13T19:17:37","date_gmt":"2024-08-13T09:17:37","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=72856"},"modified":"2025-03-14T12:02:19","modified_gmt":"2025-03-14T01:02:19","slug":"overwhelming-support-for-call-to-review-lif-commission-caps","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2024\/08\/13\/overwhelming-support-for-call-to-review-lif-commission-caps\/","title":{"rendered":"Overwhelming Support for Call to Review LIF Commission Caps"},"content":{"rendered":"<div class=\"header row\">\n<div class=\"intro\">\n<h3>A resounding call from advisers for the Government to review the LIF commission caps was clearly our Story of the Week&#8230;<\/h3>\n<\/div>\n<\/div>\n<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=\"dbf36c6452\" \/>\n<\/div>\n\n<p>Advisers have sent an unequivocal message to the Government and the regulator that it&#8217;s time to review life insurance commission caps.<\/p>\n<p>As we go to press, 90% of those voting in our latest poll agree the law-makers should reconsider the current LIF commission caps, which evidence suggests has had a significant and detrimental impact on:<\/p>\n<ul>\n<li>Life insurance new business levels<\/li>\n<li>The number of risk-focussed advisers operating in the sector<\/li>\n<li>The number of Australians being able to access life insurance advice<\/li>\n<\/ul>\n<p>Other factors have contributed to this trifecta of outcomes, including the implementation of new minimum adviser education standards and the rising costs associated with delivering financial advice across the board.<\/p>\n<p>But the most critical of all the contributing factors &#8211; based on hundreds of Riskinfo conversations with advisers and advice businesses &#8211; is the LIF commission caps.<\/p>\n<p>Last week&#8217;s report highlighting the miniscule level of life insurance advice complaints\u00a0 requiring AFCA&#8217;s consideration (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2024\/08\/01\/financial-complaints-soar-beyond-100000\/\" target=\"_blank\" rel=\"noopener\">Financial Complaints Soar&#8230;<\/a>) only adds further fuel to the simmering sense of injustice felt by so many advisers around a mandated remuneration restriction &#8211; in a free market economy &#8211; that has its basis in a report released almost ten years ago. Yes, it&#8217;s ten years this October since the release of ASIC Report 413.<\/p>\n<p>Much debate in the ensuing years has centred around the methodology employed by ASIC in compiling Repot 413 and its resulting outcomes, especially the extent to which it reflected reality, including the relative incidence of what the regulator referred to as advice files considered to have &#8220;&#8230;failed to comply with delivering appropriate and compliant client advice.&#8221; (See: <a href=\"https:\/\/riskinfo.com.au\/news\/2014\/10\/09\/asic-life-insurance-advice-review-unacceptable-level-of-failure\/\" target=\"_blank\" rel=\"noopener\">&#8220;&#8230;Unacceptable Level of Failure&#8221;<\/a>)<\/p>\n<p>Regardless of the debate around some of the findings contained in ASIC Report 413, one &#8216;truth&#8217; is that the advice world in Australia today is very different than it was ten years ago &#8211; made so by the implementation of recommendations contained in the Future of Financial Advice Reforms, the Life Insurance Framework Reforms, the Banking Royal Commission and more recently the Quality of Advice Review.<\/p>\n<p>One recommendation made by ASIC in Report 413 was for insurers to &#8220;&#8230;address misaligned incentives in their distribution channels.&#8221; This was code for abolishing upfront commissions &#8211; an area highlighted by ASIC &#8211; and potentially banning commissions altogether.<\/p>\n<blockquote><p>&#8230;it&#8217;s reasonable to suggest there remain little-to-no misaligned incentives in any life insurance distribution channels in 2024<\/p><\/blockquote>\n<p>Given all the other reforms which have since visited the sector, all designed to ultimately serve the best interests of the consumer, it&#8217;s reasonable to suggest there remain little-to-no misaligned incentives in any life insurance distribution channels in 2024. If this point is accepted by the law-makers, then surely the time has arrived &#8211; as supported by 90% of Riskinfo readers &#8211; to review the current life insurance commission caps and the two-year responsibility period.<\/p>\n<p>It&#8217;s now over to you to continue the conversation as our poll remains open for another week&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>A resounding call from advisers for the Government to review the LIF commission caps was clearly our Story of the Week&#8230; Advisers have sent an unequivocal message to the Government and the regulator that it&#8217;s time to review life insurance commission caps. As we go to press, 90% of those voting in our latest poll [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":72866,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,49,270,8291],"tags":[],"class_list":{"0":"post-72856","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\/72856","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=72856"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/72856\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/72866"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=72856"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=72856"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=72856"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}