Assistant Treasurer Arthur Sinodinos was met by an eruption of applause as he restated the need for insurance commissions, at the AFA National Conference.
In his first public address, Sinodinos said that addressing insurance remuneration was one of the Government’s top priorities.
“The differing in insurance remunerations inside and outside superannuation creates confusion,” Sinodinos said. “The Ripoll Inquiry did not recommend the banning of commissions paid for risk insurance products. And the recent experience in the UK indicates that banning commissions on risk insurance just doesn't work, and they have since reversed the ban.”
He said that banning insurance commissions would increase costs for consumers, limit their choices and “leave many people worse off”.
Sinodinos also assured advisers that the Government would address grandfathering arrangements “in an expeditious manner”.
Conference attendee and Asteron Life executive manager Mark Vilo welcomed Sinodinos’ speech and the transparency that he showed. But he questioned how high up the Government’s agenda the financial services industry really was.
Vilo said that it was great that Sinodinos was there, and that people he had spoken to were happy the Government wouldn’t go back on their promises. However, he said that the industry needed to see some “symbols”, and that the Government just needed to do something.
Sinodinos made it clear that the Government would not be making any decisions until it had heard the views of the industry and ensured that these views were “fairly balanced against the effects of conflicted remuneration, both on investors and on the viability of the industry more broadly”.
Other key points in Sinodinos’ speech were:
That the removal of opt-in requirements is at the top of his agenda
That “Ministerial Advisory Councils” would be created in every portfolio – including financial services – made up of business people, consumers and not-for-profits. They will be responsible for finding examples of unnecessary red tape and solutions on how it can be removed
That the performance of senior public servants will be assessed on their success in identifying and reducing unnecessary red tape.