With current level commission structures allowing advisers to receive up to 33 per cent of insurance premiums (including GST), AFA chief executive Brad Fox said any move by insurers to collectively cap level commissions is profiteering at the expense of advisers and their practices.
Mr Fox also stressed that the Life Insurance Framework, released by Assistant Treasurer Josh Frydenberg, was headed by a clear statement that “this proposal is not intended to limit the industry’s current ability to operate on a level commission or fee-for-service basis”.
“It would not be acceptable. It is outside of the agreement,” Mr Fox said.
“Any move to reduce the rate of level commission payments has nothing to do with the quality of financial advice.
“The AFA will strongly resist any concerted actions by the life insurers to collectively set a cap on the rate of level commissions.”
The Financial System Inquiry recommendation regarding level commissions did not seek to set a rate, which Mr Fox said suggests this should be left to the market to set.
When asked whether AMP has considered capping level commissions for risk advice, a spokesperson told ifa that “AMP is committed to reform in line with the intent and direction of the Trowbridge Report”.
A number of other insurers were contacted for comment but did not respond by deadline.
