Australia’s Shadow Assistant Treasurer and Shadow Minister for Financial Services, Stephen Jones, told the 2020 AFA Vision Conference last week that a Labor Government would ban risk commissions.
During his speech, the Shadow Minister stated that: “The provision of advice must be decoupled from the sales process which means the prohibition of commissions (however so described) from product manufacturers to advisers.”
He added that this will stop. However, it does seem he would be open to dialogue around commissions for life insurance advice.
During a 30 minute Q & A session, when AFA CEO Phil Kewin asked if Jones was specifically saying that he would prohibit any commissions payable from any products including life insurance products, Jones said there will be a review of the life insurance sector and he was open to dialogue.
“But I have got to say I start with a bias against it,” he said. “I think the burden lies on the industry at large to prove that a commission-based sales model, attached to an advising sector, is able to provide a service to customers that is not conflicted.
“And I think that’s an enormous challenge. The Royal Commission made some pretty pointed findings in that area, I think it’s an enormous burden to get over.”
Jones added that he was always open to having dialogue with the industry “…but I also want to be frank, I don’t want to leave anyone in any doubt where I come into that conversation and what my views are as we come into it”.
Kewin asked whether that meant Jones was inclined to be against commissions, but open to dialogue?
Jones agreed, noting there have been sectors where they have had very good discussions such as the mortgage broking sector.
…these things are never done and dusted
“…these things are never done and dusted, once and forever, but I come to it with a view of the world and the evidence will have to displace that view of the world”.
He agreed that part of that evidence would be the ASIC 2021 review.
A conference attendee also asked if the Shadow Minister has seen the overwhelming research that consumers will not pay fees for life insurance advice.
Jones was unsure if he had seen the particular evidence or report being referred to “..but what I have said, I start with a prima facie view on this, and may as well make it very plain…”.
“But, I have also said, with equal force, we will look at the empirical evidence and there is a review that will occur and we’ll be guided by the outcomes of those reviews.”
He said it would be “…a bit silly to say” they need this review and research, and that before anything came out that he was going to form a view and not listen to what the research says.
He added that he starts in a position but is “…willing to have that rigorously tested”.