Risk Committee's non-disclosure stance slammed

TheJoint Parliamentary Committee inquiry into commissions on risk products has veered away from recommending mandatory disclosure rules for risk advisers, warning that to do so may force many small businesses to close down or downsize.

The stance, however, has been slammed by many in the industry, with the Australian Consumers’ Association (ACA) labelling the exemption on disclosure of fees for risk advisers a “disgrace”.

“The Committee is concerned that competition may be stymied in this environment and fail to deliver benefits to consumers that would be expected from a properly functioning market,” the report says.

However the ACA has urged the Government to reject — for the third time — the committee’s call for an exemption and “stick to its guns”, while theFinancial Planning Association(FPA) has also vetoed the findings and argued that a universal commitment to disclosure of commissions is imperative.

ACA finance policy officer Catherine Wolthuizen says the recommendation to exempt life insurance agents and other vendors of risk insurance from the commission disclosure requirements of the Financial Services Reform Act “flies in the face of the basic transparency and accountability principles which underpin the Government’s new regulatory framework for financial services”.

In a dissenting report, welcomed by both the FPA and the ACA, the Australian Labor Party members of the Parliamentary Committee argued that risk advisers should be subject to the full mandatory disclosure regime.