The policy was taken to the government by industry and ratified overnight.
The policy will consist of a maximum total upfront commission of 60% of the premium in the first year.
It will also include a maximum on-going or trail commission of 20% of the premium in all subsequent years.
Also agreed to was a three-year retention or clawback period to commence on 1 January 2016 and a ban on other volume-based payments, with appropriate grand-fathering arrangements consistent with the FOFA laws.
Life insurance companies will offer fee-for-service insurance products to support advisers who wish to operate under this model.
“The Government welcomes the significant reform package received today from the Association of Financial Advisers (AFA), Financial Planning Association of Australia (FPA) and Financial Services Council (FSC) on behalf of the retail life insurance industry,” Assistant Treasurer Josh Frydenberg said.
“Having previously expressed my preference for industry to develop genuine solutions to the problems identified in the Australian Securities and Investments Commission’s (ASIC) Report 413 Review of Retail Life Insurance Advice (2014) rather than for the Government to act unilaterally, I welcome industry’s response,” he said
Transition details
The new regime will be transitioned into existence as follows:
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A) it's hard to imagine all 8 non-bank providers agreeing to anything, let alone such a draconian slashing of adviser revenue: one 'stand-out' would sink it...
B) does the Govt REALLY want to see the advice industry halved in a matter of months???