how low can this go?, page-464

I work for a competing organisation. I am not of the opinion that TC's will be banned on direct insurance products sales (such as FIG's main product line - Funeral Insurance). The changes in investments and super relate to grandfathered commissions on personal advice products where commissions have been banned going forward. The changes bring the grandfathered historical products sales in to line with current and future product sales (i.e removing these old advice commissions). The commissions were theoretically paid to advisors for the provision of ongoing advice, which was one of the subjects of the RC (i.e. advice was not being delivered ongoing and therefore unjustified). The TC's in FIG's balance sheet are not grandfathered, as they have not been banned. The commissions are sales commissions paid over the life of the product (as opposed to upfront) and are not for the provision of personal advice (these sales were direct 'general advice' only). There appears to be little reason to ban sales commissions per say (where provision of ongoing advice is not involved), and no discussion in political or regulatory circles calling for this outcome. Any such ban would open a can of worms - with any sales commission industry within scope. What about car insurance? What about any other intangible or tangible product where the consumer is perceived to have less information power than the seller. It's a different situation to commissions being paid for ongoing service that was/was not being delivered by financial advisors. 

With the above in mind - the product they were selling was a stinker, without question, and withdrawing from this business model was inevitable once the RC exposed to the public what everyone in the industry already knew. BUT in my experience the apathy of customers cannot be underestimated. These ongoing commissions will be surprisingly sticky. People will just keep the product even when they well know its terrible because they are outright lazy. Maybe it's because cancelling or changing is acknowledging the fact that they made a wrong decision, or that they were duped. The premiums customers have already paid are worthless to them if they cancel, but they still stand to receive a payout if they maintain the product and die, so perhaps they use that justification. I can only guess, but sticky is the best way to describe these TC's and surprisingly so. 

This situation is reminiscent of RAMS homelands that Forager guys did so well on in 2009-2010. A book in runoff that just keeps giving despite the fact that customers would have been better refinancing elsewhere - they just didn't though in the main. I'd like to see some buying from Forager though, to support my opinion, but maybe they are already too exposed. I was critical when they bought in, knowing what I know from inside the industry, but I have much respect for Steve Johnson so I thought at the time, maybe my judgement was clouded from experience. 

I'll buy more, but would like to see the trend turn first.