1 Comment 1 Commentby Susan Edmunds
Australia has released a new life insurance framework including changes such as restricting maximum total upfront commissions to no more than 60% of premium in the first year of a policy, from 2018.
As of next year, all trail commission will be restricted to 20% of premium.
Commerce Minister Paul Goldsmith addressed the Insurance Council’s conference in Auckland yesterday.
He said the Financial Advisers Act was a key focus for him and he was actively reviewing the options paper, which would be released by the end of the year.
But he said it was unlikely such a sweeping restriction on commission would be included as part of potential reforms.
“It’s highly unlikely,” he said. “I don’t like the idea of Government directly regulating such things.”
Goldsmith said his preference was for a disclosure regime that was clear, simpler and effective. “Some countries ban commission full stop and I think that’s carrying it too far.”
He said consumers had a right to know if an adviser was being given commission by a product provider. “The options paper will outline some ways to ensure these potential conflicts of interest are managed and disclosed. I am well aware it is a complex area and one that very easily lends itself to unintended consequences.”
Consistency was important, he said, as was a distinction between advice and sales activity.
Goldsmith said the options paper held three potential options at the moment, with modest changes through to more significant restructuring of the rules.
There will be another opportunity for the industry to give feedback before it goes through the select committee process.
He said he expected it to reach Cabinet within the next few weeks.
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Too often lately we have had so much negative press being presented that it has become detrimental to good advisers, giving good advice.
I am personally sick and tired of "looking over my shoulder" to check that what I am doing the best for my clients by putting "them first" as I always have.
The world is being regulated for the "good" majority due to issues actioned by the "ratbag" minority who will always be present in any sector in any industry.
Most of us are just trying to do the correct thing for our clients and be rewarded fairly for the effort we put in.
Australia has "over regulated" it's industry to the detriment of good advisers giving excellent advice to their clients. I have had a family member who has "exited" the industry in Australia due to onerous compliance requirements.
Long live common sense!