Hybrid commission model supported by govt

The policy will consist of a maximum total upfront commission of 60 per cent of the premium in the first year.

It will also include a maximum ongoing or trail commission of 20 per cent of the premium in all subsequent years.

Also agreed to was a three-year retention or clawback period to commence on 1 January 2016 and a ban on other volume-based payments, with appropriate grandfathering arrangements consistent with the FOFA laws.

Life insurance companies will offer fee-for-service insurance products to support advisers who wish to operate under this model.

“The Government welcomes the significant reform package received today from the Association of Financial Advisers (AFA), Financial Planning Association of Australia (FPA) and Financial Services Council (FSC) on behalf of the retail life insurance industry,” Mr Frydenberg said.

“Having previously expressed my preference for industry to develop genuine solutions to the problems identified in the Australian Securities and Investments Commission’s (ASIC's) Report 413 Review of Retail Life Insurance Advice (2014) rather than for the Government to act unilaterally, I welcome industry’s response,” he said.