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Consultation on the potential banning of commissions paid to insurance brokers is expected to commence shortlyThe Federal Government recently announced that commissions paid to financial planners would be banned and NIBA is concerned that insurance brokers are next on the list. NIBA’s CEO Noel Pettersen attended an advisory group meeting with Treasury and ASIC on 16 May. He said that it appears industry consultation will commence shortly with open discussions in major centres and then with key advisory groups like NIBA. It is anticipated that there will be an initial period of six months consultation with the view to making any changes in 2012. However, a Federal Election could delay proceedings. “NIBA welcomes discussion and close consultation with Treasury on the vexed subject of commission disclosure for risk insurance products. It's an issue that has been around for decades but nothing has really changed,” Mr Pettersen said. “There is no evidence of market distortion of consumer driven need to introduce disclosure on risk insurance products. After all, they are not long-tail investment products. The insurance policy is simply an invitation to renew annually and the consumer has the right to shop around if the product or price does not meet their needs. Besides, remuneration disclosure is already covered by FSRA, the NIBA Code of Practice and also formal conflicts of interests provisions in the Act. “There is no doubt that the Australian insurance buyer is already the best protected in the Western World.” The Minister for Financial Services, Superannuation and Corporate Law, Chris Bowen, has said he has “an open mind” about insurance commissions prior to the industry consultations, and says there are good arguments on both sides as to whether commissions on insurance should be banned or not. Return to Broker Buzz |
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