{"id":77838,"date":"2025-06-30T22:21:54","date_gmt":"2025-06-30T11:21:54","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=77838"},"modified":"2025-07-07T10:59:47","modified_gmt":"2025-07-06T23:59:47","slug":"renewed-call-to-review-lif-commission-structure-trowbridge","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2025\/06\/30\/renewed-call-to-review-lif-commission-structure-trowbridge\/","title":{"rendered":"Renewed Call to Review LIF Commission Structure &#8211; Trowbridge"},"content":{"rendered":"<div class=\"header row\">\n<div class=\"intro\">\n<h3>There was significant reader interest this week in the news that the architect of the report serving as the foundation for the Life Insurance Framework legislation is calling for a review of the structure of the life insurance commission caps\u2026<\/h3>\n<\/div>\n<\/div>\n<p>The architect of the report on which the Life Insurance Framework legislation is largely based has called for a review of the structure of life insurance commission caps.<\/p>\n<p><strong>John Trowbridge<\/strong>, author of the Independent Chairperson\u2019s Report stemming from the work of the Life Insurance and Advice Working Group following the release of ASIC\u2019s contentious Report 413 in October 2014, spoke with Riskinfo recently in the lead-up to the tenth anniversary of the announcement of the LIF reforms.<\/p>\n<p>The recent <a href=\"https:\/\/riskinfo.com.au\/news\/2025\/06\/10\/john-trowbridge-awarded-oam\/\" target=\"_blank\" rel=\"noopener\">Order of Australia recipient<\/a> is calling for a change to the LIF commission caps structure with a view to:<\/p>\n<ul>\n<li>Providing greater access to critical life insurance advice for lower and middle income earners<\/li>\n<li>Delivering a more viable commercial proposition for advisers to serve this group<\/li>\n<\/ul>\n<figure id=\"attachment_51351\" aria-describedby=\"caption-attachment-51351\" style=\"width: 150px\" class=\"wp-caption alignright\"><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2020\/08\/John-Trowbridge.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-51351 size-full\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2020\/08\/John-Trowbridge.jpg\" alt=\"\" width=\"150\" height=\"180\" \/><\/a><figcaption id=\"caption-attachment-51351\" class=\"wp-caption-text\">John Trowbridge OAM<\/figcaption><\/figure>\n<p>According to Trowbridge, the adjustment needed to satisfy both these conditions is for advisers to have access to commission payments which are the higher of 60% and a fixed dollar amount.<\/p>\n<p>For example, if the fixed minimum commission amount were set at $2,400, premiums above $4,000 would attract the 60% maximum commission currently allowed, while annual premiums below $4,000 would still allow the adviser to be paid up to $2,400.<\/p>\n<p>The following chart presents the simplicity of Trowbridge\u2019s recommendation, where a minimum $2,400 commission amount is payable on all annual premiums of $4,000 or less:<\/p>\n<figure id=\"attachment_77839\" aria-describedby=\"caption-attachment-77839\" style=\"width: 870px\" class=\"wp-caption aligncenter\"><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart.png\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-77839\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart.png\" alt=\"\" width=\"870\" height=\"675\" srcset=\"https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart.png 870w, https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart-300x233.png 300w, https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart-768x596.png 768w, https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart-696x540.png 696w, https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250630-Trowbridge-Chart-541x420.png 541w\" sizes=\"auto, (max-width: 870px) 100vw, 870px\" \/><\/a><figcaption id=\"caption-attachment-77839\" class=\"wp-caption-text\">Source: Submission to Quality of Advice Review &#8211; Life insurance advice for super fund members and the middle market, John Trowbridge 27 October 2022<\/figcaption><\/figure>\n<p><strong>The Whole Package<\/strong><\/p>\n<p>Trowbridge asserts this modification to the existing LIF commission arrangement is a reflection and a consequence of the fact that the economic and regulatory conditions he projected in his Independent Chairman\u2019s Report ten years ago have not been met.<\/p>\n<p>In 2015 when initially releasing his recommendations, then in 2020 (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2020\/08\/02\/call-for-re-think-on-risk-commissions\/\" target=\"_blank\" rel=\"noopener\">Call for Re-Think on Risk Commissions<\/a>) and again in 2025, Trowbridge has been at pains to point out to the lawmakers and to his critics that his initial capped commission proposal took into account regulatory and other measures intended at the time to reduce the cost of advice. A reduction in the cost of life insurance advice, argued Trowbridge in 2015, would allow a commercially-viable set of conditions for advisers operating on capped commissions.<\/p>\n<p>In the absence of the reduction in the cost to serve, however, and where the opposite has in fact occurred over the last ten years, Trowbridge has now called for this change.<\/p>\n<p><strong>Submission to QoA Review<\/strong><\/p>\n<p>Trowbridge also made this recommendation in a paper he submitted to Michelle Levy\u2019s Quality of Advice Review \u2013 a paper he was requested to submit in 2022.<\/p>\n<p>In the Final Report of her Review recommendations, however, Levy elected not to adopt this suggested modification from Trowbridge.<\/p>\n<p>With our sincere thanks to its author, advisers can take this link to review a copy of Trowbridge\u2019s submission to the Quality of Advice Review, noting his remit also extended to additional issues:<\/p>\n<p><a href=\"https:\/\/riskinfo.com.au\/news\/files\/2025\/06\/250626-Trowbridge-QoA-Review-Paper.pdf\" target=\"_blank\" rel=\"noopener\">Life insurance advice for super fund members and the middle market<\/a><\/p>\n<p>Trowbridge\u2019s call for the structure of the LIF commission caps to be reviewed coincides with FAAA GM Policy, Advocacy and Standards, <strong>Phil Anderson\u2019s<\/strong> personal call for the caps to be increased from 60\/20 to 80\/20 (see: <a href=\"https:\/\/riskinfo.com.au\/news\/2025\/06\/24\/anderson-calls-for-80-20\/\" target=\"_blank\" rel=\"noopener\">Anderson Calls for 80\/20<\/a>).<\/p>\n<p>These two suggested solutions will serve to generate further debate over the future of existing risk commission caps and Riskinfo will report future developments as they unfold.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>There was significant reader interest this week in the news that the architect of the report serving as the foundation for the Life Insurance Framework legislation is calling for a review of the structure of the life insurance commission caps\u2026 The architect of the report on which the Life Insurance Framework legislation is largely based [&hellip;]<\/p>\n","protected":false},"author":3,"featured_media":77842,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,270,8291],"tags":[],"class_list":{"0":"post-77838","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-compliance-regulation","8":"category-remuneration","9":"category-story-of-the-week"},"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/77838","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=77838"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/77838\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/77842"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=77838"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=77838"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=77838"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}