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The industry funds have admitted to a Parliamentary Committee that they receive rebates under “risk sharing” arrangements with insurers but intend that those arrangements will become more transparent in future with the rebates being separately accounted.
The Australian Institute of Superannuation Trustees (AIST) executive manager, policy and research, David Haynes has used an answer to a question on notice from the Parliamentary Joint Committee of Inquiry into the Life Insurance industry to confirm the relatively widespread use of the arrangements.
“While I do not know all the details in relation to all AIST member superannuation funds, I am aware that some of our super fund members have risk sharing arrangements in place with their insurers,” Hayne’s answer said. “Each of these arrangements have been individually negotiated between the super fund and their insurer, and so vary from case to case.”
“These arrangements may involve payments to or from their insurer depending on their claims experience. For example, insurance premiums for an annual period may be adjusted after the end of that year once the claims experience is known, to reflect that claims experience. This is known as the Premium Adjustment Model,” his answer said.
However Haynes said AIST had been discussing this issue with its members, and would be suggesting to the Insurance in Superannuation Working Group (ISWG) “that the industry as a whole consider the following elements as part of good practice and standardised disclosure around risk sharing:
- Ongoing support for risk sharing arrangements;
- Rebates to the fund to be separately accounted for, and held in a dedicated insurance reserve;
- These arrangements to be transparent and publicly disclosed, and include details of the amount/s paid, by whom and to whom; and
- Disclosure to be in super fund’s financial statements and annual report.
Comments
Well yes of course this should be disclosed, it should be disclosed on every single members statement! Profit sharing my ear, cmon asic why let the instos keep getting these kickbacks? Its commission by any other name, you ASIC are gutless !
Would the official spokesperson for the Industry Super Funds, Mr David Whiteley, please make a comment.....
Would the official spokesman for the Industry Super Funds, Mr David Whiteley, make a comment on these group based commissions....
he made comment in 2011 http://www.abc.net.au/lateline/business/items/201104/s3203020.htm
The rank hypocrisy of Industry Super Funds and David Whiteley is finally bubbling to the surface. How the media treats this will be telling.
PS - Just to be clear "Risk Sharing" is not what it claims to be. It is members being knowingly overcharged, and the Industry Funds keeping the members refund for themselves. Sickening.
Gee, the Insurers call this "profit sharing" based on claims experience. So if the industry funds keep their insurance claims to a minimum, they receive a "risk sharing" bonus/commission. No conflict of interest here, no non-disclosure, no conflicted remuneration, all for the "benefit" of members. ISA you hypocrites!!
This is confirmation that Industry Funds DO GET COMMISSIOONS which are UNDISCLOSED.
AGAINST THE LAW IS IT NOT? Come on Federal Police, what are you waiting for?
And these COMMISSIONS DO NOT END UP IN THE ACCOUNTS OF THE MEMBERS PAYING FOR INSURANCE BUT IN A GENERAL ADMIN FUND--- JUST LIKE FRANKING CREDITS!
No real surprise but does make you wonder what ASIC and APRA does. Why on earth are these rebates bot in their financials - what sort of corporate governance are they running. Maybe APRA could also look at the 'sponsorship' for non-existant conferences that industry funds use to channel money to the Labour party. They could then be assessed rightly as party contributions used to influence the Labour party's direction
So why is it that I can't get a commission from a product, why do I have to disclose these type of alternative remuneration forms yet my industry super fund who I rang up and said should I add to super and buy insurance does not have to disclose it ? Weren't they lobbying so hard to remove commissions? Yet they now get commissions from other insurance companies.
So advisers working in the group superannuation market have had their livelihoods destroyed and cant get paid for giving advice while these hypocritical parasites continue to take undisclosed commissions for not giving advice
Could only have happened with ASIC Commissioners knowledge and tacit approval
Just ashamed to watch this corruption happening under a Coalition Government !
TAL's comment previously from the senate enquiry "They are paid as either lump sums or as an offset against future premium," it said. "TAL pays these rebates on the expectation (and often on a contractual assurance in the policy) that the funds are used for the benefit of members."...I have NEVER seen a "Premium Adjustment" on indivudal client premiums within an ISF. Can they please explain in DETAIL where these funds go? Unbelievable that they havent to date unless they are hiding something?
Looks like the accounts and audit maybe a bit misleading accidentally merged, hidden, non disclosed, however an important piece of information. How can the auditors miss this, the accountants miss, the trustees have ignored or dont understand, and just hidden, maybe statements need to be redone and all disclosed corrrectly
Simple. I've stopped using TAL. I suggested others also do so.
So let me see if I understand: I agree to charge a client only what it takes to do the job, but upfront we agree a payment of $500. As it turns out, it only cost me $450, so do I give back the $50? No I keep it myself. Surely this is viewed even worse than a commission, dare I say 'theft' since I would never undercharge upfront and then have to pay out of my own pocket.
'We never pay commissions' is truly one of the best advertisements in financial planning history.....completely hypocritical, but great selling indeed.
"Never Pay Commissions but we're happy to TAKE them" would be more appropriate....misleading advertising?
i agree with all above, gives a new meaning to compare the pair - maybe compare nothing, people in industry funds http://www.industrysuperaustralia.com/media/media-releases/government-mu..., interesting to find out when ASIC should be appearing of hidden commissions and rebates not appearing as conflicted remuneration in an SOA
How much money would this add up to !
Would a $30m rebate back to Australian Super last year be close to the mark ?
These payments are far worse than commissions. The industry funds deal directly with claimants and they are incentivised to keep claims low. Imagine a financial planner getting secret payments for discouraging valid claims! Even worse, most premiums are not approved by members. They are 'automatically' thieved from members accounts (which destroys the wealth of young, low income and transient workers). These hidden commission are then used to artificially reduce fees - what a scam! ASIC and Fairfax cannot continue to ignore this scandal.
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