Crack down on life adviser commissions possible
The Australians are cracking down on how insurance advisers and brokers are paid, and New Zealand law firm Russell McVeagh says that a similar sort of probe may well follow here.
Friday, June 10th 2005, 11:09PM
by Rob Hosking
The Australian Securities and Investments Commission is looking at whether insurance advisers and brokers are fully disclosing any interest that may influence advice, as well as brokerage charges and commissions.
There is also a requirement under Australian law to offer suitable advice – what has become known as the “know your client, know your product” rule.
The Australian regulators are due to report shortly.
The New Zealand legal regime has some differences to the Australian set up – life insurance products which are categorised as having a savings component are deemed to be securities under the Securities Act, and there are already obligations on insurance brokers to declare any previous convictions under the Act.
However the Law Commission report on the industry released late last year, along with the Australian moves, recommends changes which would move New Zealand closer to the Australian approach.
Amongst other recommendations, the Law Commission recommended scrapping the Life Insurance Act and treating insurance brokers the same way as other financial intermediaries.
The commission also recommended encouraging insurance advisers and brokers to move away from commission-based remuneration to time or other methods, as well as a legal requirement that insures publicly reveal how they pay advisors and brokers.
“If the [Law] Commission’s propositions are accepted, it is likely that the appropriate New Zealand body would look to follow ASIC’s lead,” Russell McVeagh says.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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