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ARTICLE · 09 DECEMBER 2015

Consultation commences on commission restrictions in life insurance

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The exemption from FOFA conflicted remuneration provisions for life risk insurance products may be significantly amended.

AustraliaFinance and Banking
Michael Chaaya
Michael Chaaya
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The exemption from the FOFA conflicted remuneration provisions for life risk insurance products will be significantly amended from 1 July 2016 under draft legislation released by the Federal Government for consultation. Under the proposed laws, a commission received would be conflicted remuneration unless new "benefit ratio requirements" and "clawback requirements" are satisfied or if the ratio between the benefit and amount payable for the product is the same in the year in which the product is issued as it is for each year the product is renewed.

The legislation does not prescribe the benefit ratio requirements and clawback requirements, instead leaving these for ASIC to determine. This is part of a growing trend for Australian regulators who are increasingly assuming a law-making role in addition to their regulatory rule.

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