The Consumer Action Law Centre is pleased to provide a submission in response to the Consultation Paper prepared as part of the Post Implementation Review of the Future of Financial Advice reforms.
We have limited our submission to the following matters:
- the ban on up-front and trailing commissions and like payments for both individual and group life risk insurance within superannuation; and
- the limited carve-out for basic banking products, consumer credit insurance and general insurance from the ban on certain conflicted remuneration structures.
We believe product sales commissions and product based payments inevitably distort adviser and sales-staff behaviour, elevating the sales imperative above considerations of consumer well-being. This can generate very poor consumer outcomes often occasioning significant financial harm. The frequency and extent of this harm is such that the role of commissions and product based payments, (indeed the whole sales-based culture of banking and insurance), should be fundamentally reconsidered.
We therefore consider that the ban on up-front and trailing commissions and like payments for life insurance should be extended to all life insurance policies whether within or outside superannuation. We also believe that consumer credit insurance and general insurance should not be carved out from the ban on conflicted remuneration.CALC-submission-170608