ASIC releases instrument setting the commission caps and clawback amounts as part of the life insurance advice reforms
ASIC has made ASIC Corporations (Life Insurance Commissions) Instrument 2017/510 (Life Insurance Commissions Instrument), as part of the life insurance reform package which was announced by the Government on 6 November 2015.
The Life Insurance Commissions Instrument gives effect to the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017, which allows commissions to be paid for the sale of life insurance. The Life Insurance Commissions Instrument sets limits on the commissions through a commission cap, and requires amounts to be repaid if the policy is cancelled within the first two years of the policy (clawback).
Setting commission caps and clawback amounts is intended to reduce the incentives for advisers to provide inappropriate advice to clients.
ASIC Deputy Chairman Peter Kell said, ‘The commission caps and clawback requirements are important steps in improving the quality of advice.’
‘The commission caps and clawback amounts commence on 1 January 2018. ASIC is warning advisers against inappropriately switching clients into new policies prior to this commencement date where this is not in their clients’ best interests,’ Mr Kell said.
‘ASIC is currently using data from insurers to undertake targeted surveillances to seek out any advisers engaging in this misconduct.’
ASIC consulted with industry on its proposals to set the commission caps and clawback amounts in December 2015 (refer: 15-384MR).
ASIC will conduct a post-implementation review in 2021 to assess the impact of the reforms.
ASIC today released Report 527 Response to submissions on CP 245 Retail life insurance advice reforms, a report summarising the key feedback ASIC received in response to Consultation Paper 245 Retail life insurance advice reforms and our response to that feedback.
