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clock Created with Sketch. 07/11/18
14:27
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Originally posted by EyeSky
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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.
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I agree with you on the "stickiness". The only worry there is that a lot of customers seem to have received free insurance for a year as an enticement - those policies may be less sticky.
