Calls for insurance commissions to be banned

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Industry Super Network (ISN) has welcomed ASIC’s guidance on conflicted remuneration released on Monday, but says remaining commissions must still be removed from insurance.

David Whiteley, chief executive of ISN, said the advice industry needed to transition towards “professionalism”, which would require advisers to adopt charging practises with no bias, to better align the interests of advisers and their clients.

“The Future of Financial Advice reforms represent an important step in this direction, but over time, the industry must continue to remove the remaining commissions on insurance and percentage based charging on investments, which replicate the same conflicts as commissions.”

ISN also said the Government’s release of draft regulations which clarify grandfathering arrangements for the ban on commissions and other forms of conflicted remuneration, will allow for the transition towards a “true profession”.

“The draft regulations strike a good balance between allowing an appropriate transition for the financial advice industry to comply with the Future of Financial Advice reforms, while ensuring that all new financial planning clients will be afforded the higher protections that the reforms have been put in place to deliver,” Whiteley said.

The network plans to make a submission to Treasury to support the drafting approach, which it says “balances generous transitioning to assist existing financial planning businesses, while ensuring that all new  clients will benefit from the higher minimum professional obligations established by the FoFA reforms”.