Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
O’Dwyer announces LIF passes House

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

O’Dwyer announces LIF passes House

Staff reporter 2 minute read

The Minister for Revenue and Financial Services Kelly O’Dwyer says the reduction of upfront commissions will better align the interests of financial advisers and their clients, following the passage of the Life Insurance Framework bill through the House of Representatives.

Ms O’Dwyer said in a statement the changes to LIF will significantly reduce the incentive for advisers to churn clients between life insurance products where there is no consumer benefit.

“High upfront commissions have been identified as a significant cause of poor quality life insurance advice,” she said.

“ASIC’s 2014 review found that in 45 per cent of cases involving high upfront commissions, the advice provided failed to meet the legal standard.

“This is unacceptably high. Similar concerns were also expressed by the Murray inquiry and the industry-initiated Trowbridge report.”

Advertisement
Advertisement

Under LIF, the rate of upfront commissions paid to advisers will be phased down to a maximum of 60 per cent, with ongoing commissions capped at 20 per cent, the statement said.

The bill will also introduce a two year upfront commission clawback period under which 100 per cent of the upfront commission will be clawed back in the first year, and 60 per cent of the upfront commission will be clawed back in the second year, should a policy lapse.

Level commissions and fee-for-service remuneration will remain and be uncapped, the statement said.

The changes will commence on 1 January 2018 and will apply equally to all life insurance advisers, and will provide flexibility to ensure the reforms capture all life insurance channels in the future, including those that may not be considered to provide financial advice.

[Related: Govt lobbied over commission clawbacks]

O’Dwyer announces LIF passes House
default
TheAdviser logo
default
James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.

 

FROM THE WEB
more from the adviser
Analysis uncovers ‘surprising’ spike in high-LVR lending

The share of new loans approved with an LVR greater than 80 per c...

Banks charged $1.17bn in home loan fees

More than a quarter of the $4.19 billion dollars of bank fees cha...

P2P lender drops car loan rates

Peer-to-peer lender RateSetter has announced that it has dropped ...