A key Federal Parliamentary Committee has called for further Government scrutiny remuneration in the life insurance industry.
The Parliamentary Joint Committee on Corporations and Financial Services inquiry into the Life Insurance Industry has taken a strongly negative view of the sector, and has pointed to evidence from the Australian Securities and Investments Commission (ASIC) indicating “that a plethora of hidden payments including commissions, fees, performance-related payments, soft dollar benefits, and nonfinancial benefits still exist within the various structures of the life insurance industry”.
The chairman’s foreword to the committee report said: “These money flows continue to exist to varying degrees across all three sectors: retail, direct, and group”.
“The wrong type of financial incentives have contributed significantly to a range of poor practices and misconduct in the financial services industry including misleading advice and mis-selling with poor outcomes for customers,” the report said.
“The committee is therefore recommending that ASIC and APRA [the Australian Prudential Regulation Authority] conduct detailed examinations of all payments, benefits, and fees across all sectors of the life insurance industry and that the government consider further regulation following the results of those examinations.”