Financial Services Authority<\/a>\u00a0(FSA) was concerned that advisers might mis-sell risk products alongside investments purely to get commission, irrespective of the customer’s needs.<\/p>\n\u00a0the FSA … felt the industry was not listening to its concerns about the potential for mis-selling<\/h6>\n
Mr Kirwan told riskinfo that arguments put forward by advisers and the broader industry about \u2018under-insurance’ simply alarmed the FSA because it initially felt the industry was not listening to its concerns about the potential for mis-selling.\u00a0 The key point here was that the FSA wanted to hear that the industry was alive to the issue and was prepared to find ways to mitigate it, rather than playing it down.<\/p>\n
Mr Kirwan said this concern over possible future mis-selling of life insurance and other risk products is the reason why the ABI negotiated a deal to keep risk commissions, but with additional commission disclosure requirements when investments and risk products are sold alongside each other.<\/p>\n
From 2012 in the UK, advisers will be required to disclose the actual amount of commission to the customer as part of the sales process in circumstances where advice is given that covers both risk and investment products:<\/p>\n
“As well as ensuring transparency with consumers, it also empowers them to negotiate the fees for investment advice as they will know how much the adviser is earning from the risk part of the deal,” said Mr Kirwan, who added that this resolution formed a key plank in reaching a solution in the UK where risk commissions will now be allowed to continue.<\/p>\n
Mr Kirwan’s message to the Australian market is that it needs to engage with Australian Treasury officials on this issue, even though full remuneration disclosure is already a requirement in Australia,\u00a0if it is not doing so already.\u00a0 If they hold similar concerns, or indeed others, they must be addressed.\u00a0 If any concerns are not heard, understood and addressed, Mr Kirwan believes it has the potential to shape a decision that will see all commissions banned in the Australian financial services market, which he believes would be a poor outcome for both advisers and consumers.<\/p>\n
(See also last week’s story Future of Risk Commissions – the UK Experience<\/a>.)<\/p>\n","protected":false},"excerpt":{"rendered":"Further information from the UK this week serves to highlight the issues that Australian regulators may be addressing as they consider the future of risk commissions in Australia.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,270],"tags":[],"class_list":["post-8488","post","type-post","status-publish","format-standard","category-compliance-regulation","category-remuneration"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/8488","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=8488"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/8488\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=8488"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=8488"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=8488"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}