Revisit conflicted remuneration, not risk commissions, policymakers told
Instead of targeting commissions for life insurance products, policy reforms should revisit conflicted remuneration, which hasn’t been properly handled by the Future of Financial Advice (FOFA), wealth advisory firm Chan & Naylor believes.
The firm says removing life insurance commissions entirely would lead to chronic underinsurance and suggested policy makers turn their attention elsewhere, with commission-removal labeled an ineffective reform.
“However the existing framework is robust enough to prevent risk advisers churning policies, and if commissions were removed altogether in lieu of a service fee then this would not correlate to a one-to-one premium saving for the client,” David Hasib, a Partner at Chan & Naylor Wealth Planning, said.
He also said risk commissions are justified by the amount of work risk advisers put into investigating certain products and policies.
Hasib called for the industry to take a closer look at conflicted remuneration, which he said was not handled thoroughly enough under FOFA.
“If we can remove the inherent, product selling culture of the 80s & 90s, then it will be to the benefit of all Australians,” he said.
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