Partners Life Managing Director, Naomi Ballantyne, has voiced the insurer’s intention in doing its utmost to make sure any possible change in commissions here such as seen in Australia, doesn’t result in significant detrimental impact to New Zealand advisers and their businesses.
“We know that there are advice regulations coming which are designed to try and manage the behaviour that causes conflicted advice and that’s exactly what regulation should do – it should tackle bad behaviour,” said Ballantyne, speaking during a panel discussion at a Partners Life launch roadshow last week.
But she said commissions are complex and noted that FSLAB regulations were created by MBIE based on current remuneration structures including commissions.
She said if the Government were to change the remuneration structure for financial advisers, MBIE would most likely have to revisit the incoming regulations before the bill is passed to ensure the regulations are adjusted to cover the unintended consequences of any proposed commission changes.
“You can imagine MBIE being told that now we are going to change the remuneration structure, saying to the Government ‘then we have to reconsider the regulations before we’ve even rolled them out because they were built on the basis of a remuneration structure you now want to change and we don’t know what conflicts your new changes could bring’.
“I’m not sure the Government’s got the appetite to do that,” said Ballantyne. “So I suspect there will be quite a lot of water under the bridge before there is any move on commissions in this market.”
Ballantyne said the immediate risk is if the Government chose to take the route of simply following in Australia’s footsteps.
“My view on that is it’s my job and our job to demonstrate to them the impact of what they have done to Australia by changing the commissions,” she said.
“We are doing research to demonstrate with fact what has actually happened in Australia so we can present that fact and have an informed debate,” she added, referring to the fall in new business, increased fixed costs for insurers and increasing customer premiums.
“You fight fire with facts and that’s what we’re doing, producing the facts.”
She said Partners Life is also researching how much advisers actually make.
“Commission is irrelevant to advisers, it’s profit that matters – how much it costs you to run your businesses so we can demonstrate both the money that you need to be able to deliver the advice that you deliver but also think about if commission levels change, how else could we support you so you still make the money you need.”
Previously, Professional IQ College Chief, Rod Severn, also spoke out on the possible impact of changing adviser commissions (see: Meddling With Commissions Could Hurt New Zealanders).