All commissions and other forms of conflicted remuneration for the sale of retail life insurance policies should be banned, according to the Australian Institute of Superannuation Trustees (AIST).
What is more, the industry funds body wants an end to the regime which allows the banks to cross-sell products to employers.
In a submission to the Senate Economics Committee inquiry into consumer protection in the banking, insurance and financial sector, the AIST claimed “all exemptions, gaps and loopholes” which it believes are utilised by the banking industry to cross-sell should be closed off.
“A clear signal should be sent to the for-profit side of the financial services industry by removing exemptions, gaps and inconsistencies,” it said.
The AIST submission runs directly counter to that of the Financial Services Council which (FSC) specifically acknowledged industry fund allegations but said this represented “significant public commentary, unsupported by evidence that inducements are offered by the superannuation sector”.
The FSC said the allegations were simply not true that “a recent, comprehensive review by ASIC and APRA confirmed that there was no evidence of inducements being offered”.
The AIST submission urged that, “the numerous exemptions from the regulatory framework for superannuation currently afforded choice products and investment options, platforms and legacy products should be removed to ensure that all superannuation fund members are equally protected”.
“As part of the implementation of an industry funding model for ASIC, risk metrics should be used to assess the relative risk of industry sub sectors to better understand the relative risks of for profit versus not-for-profit subsectors and levy sub sectors appropriately,” it said. “Licensees should be required to report to ASIC and publicly on the process, progress and outcomes of all review and remediation programs.”