Following the release of the life insurance reforms draft legislation, Assistant Treasurer and Minister for Small Business Kelly O’Dwyer said the days of advisers participating in “huge amounts of churning” are being brought to an end.
In a recent 2UE radio interview, Ms O’Dwyer was asked what the government was doing regarding advisers and financial planners receiving commissions.
While noting in response that the government had previously acted on commissions in financial planning, Ms O’Dwyer addressed commissions in the retail life insurance sector.
“In the life insurance industry you were able to get an upfront commission of 120 per cent of the premium – upfront. Which is why we were seeing a huge amount of churning within the industry,” Ms O’Dwyer said in the interview.
“The last 12 months people would be sold a new life insurance package and that would be because sometimes their life insurance adviser would be getting a direct financial benefit from that, so we’ve made changes to that.”
“We have announced those changes and we have said that that is simply not going to be on,” she said.
Industry stakeholders are invited to submit comments on the draft bill and explanatory material to Treasury up until 4 January 2016.
Some industry associations have, however, said that this is too short a period of time for feedback to be provided to Treasury.