The current Corporations Act 2001 (Cth) (Corporations Act) and Corporations Regulations 2001 (Cth) (Corporations Regulations) regime for life risk insurance conflicted remuneration is set to change. The reforms are designed to:
- address issues in the quality of advice identified in ASIC Report 413 Review of Retail Life Insurance Advice (2014);
- avoid significant Government legislative intervention having regard to recommendations from the Financial System Inquiry Final Report and John Trowbridge, Review of Retail Life Insurance Advice Final Report;
- ensure that consumers can access unbiased and appropriate advice when considering purchasing life insurance; and
- prevent advisers from providing advice in circumstances where their own interest in significant commissions is at odds with the interests of the consumer e.g avoiding risks such as unnecessary churning.
ASIC will conduct a further review in 2021 to consider whether the reforms have been successful.
The changes will be implemented through the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 (the Act) and Corporations Amendment (Life Insurance Remuneration Arrangements) Regulations 2017 (the Regulations), as well as the new ASIC Corporations (Life Insurance Commissions) Instrument 2017/510 (the Instrument) which ASIC made on 31 May 2017.
Those involved in life risk insurance sales need to re-examine their remuneration arrangements.
For a full summary of the issues, email us a request at [email protected]
IMPORTANT NOTICE
This document is designed to provide helpful general guidance on some key issues relevant to this topic. It should not be relied on as legal advice. It does not cover everything that may be relevant to you and does not take into account your particular circumstances. It is only current as at the date of release. You must ensure that you seek appropriate professional advice in relation to this topic as well as to the currency, accuracy and relevance of this material for you.
Liability limited by a scheme approved under Professional Standards Legislation. Legal practitioners of Radford Lawyers Pty Limited are members of the scheme.
Recent Comments