The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has now held six rounds of hearings.
On 28 September 2018 the Royal Commission published an Interim Report which does not deal with issues relating to insurance or insurance intermediaries, but there are some aspects of the Report which could be of relevance to insurance intermediaries.
For example, the Interim Report asks whether authorised representatives should be allowed to distribute products manufactured by their AFS licensee. The Interim Report also raises serious issues relating roles, responsibilities and effectiveness of regulators.
Some of the issues raised in the Interim Report include –
- Do all Australians have adequate and appropriate access to banking services?
- What are the appropriate roles, responsibilities and legal duties of intermediaries such as mortgage brokers, financial advisers, and authorised representatives of financial planning and advice firms?
- Are the responsible lending laws appropriate, and to they operate in relation to SME businesses and agricultural businesses?
- Has the conduct of regulators (ASIC and APRA) been adequate and appropriate?
Following the Round 6 hearings on life and general insurance in September, the Royal Commission raised a number of issues for further consultation, including:
- Are there some products that should not be sold at all, such as accidental death and accidental injury products?
- Is the current disclosure regime appropriate, and if not how should it be changed?
- The Royal Commission is also interested in hearing comments on the standard cover regime in the Insurance Contracts Act and Regulations.
- Should remuneration on general insurance products remain exempt from the ban on commissions established by the FOFA reforms? If so, why?
- Should there be controls on the sale of add-on insurance products by motor dealers?
- Should claims handling be included within the concept of a financial service, and therefore be made capable of regulation and oversight by ASIC?
- Should unfair contract terms legislation be extended to insurance?
- Should there be further changes to the Life Insurance and General Insurance Codes of Practice?
- Are compliance monitoring and reporting systems appropriate?
As can be seen from this brief list, the policy issues identified by the Royal Commission include close attention to the issue of remuneration, including commissions and other forms of remuneration in general insurance. The issues relating to commissions and remuneration arose in areas other than general insurance broking, but the comments and the potential reforms clearly have the potential to affect general insurance broking remuneration.
NIBA is giving very careful consideration to the nature and content of a submission to the Royal Commission on matters that could well affect insurance brokers, especially the issues that relate to remuneration of intermediaries. NIBA is also considering making a submission on the more broader issues covered in the Interim Report.
NIBA Members who have comments on the proposals should provide them to NIBA CEO Dallas Booth at email@example.com.