The Senate Economics Legislation Committee has recommended that the legislation to bring into effect the Life Insurance Framework (LIF) should be passed without any changes.
Tabling its report on the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016, the Senate Economics Legislation Committee said it believes "the bill contains provisions designed to ensure that consumers can access unbiased and appropriate advice" on life insurance.
The committee then recommended that the bill be passed.
"The committee notes that advisers have thus far been allowed to provide advice in circumstances where their own interest in a significant commission is at odds with the interests of the consumer," the report said.
"This bill will effectively address unnecessary churning and will ensure that ASIC has greater regulatory oversight over the industry.
"The committee notes the concerns of submitters in relation to consumer choice and the future of the industry, but believes that the bill contains mechanisms to address these risks. In particular, the powers conferred on ASIC ensure flexibility and responsiveness while the scheduled 2018 review provides an opportunity to correct any imbalances or pursue further reform," the report said.
However, additional comments within the report from Labor senators note concerns from a number of submitters, especially that the reforms will see adverse consumer outcomes, and the industry will see a decline in adviser numbers and an increase in the market share of large institutions.
"These concerns about the activities of large institutions are legitimate and Labor acknowledges the risk that such institutions may come to dominate the industry," the report said.
"In this regard, Labor draws attention to the instances of poor corporate behaviour that the Senate Economics References Committee examined during its inquiry into the performance of the Australian Securities and Investments Commission and continues to investigate through its inquiry into the scrutiny of financial advice."