In a statement, BT said adviser commissions would cease on its Protection Plan policies offered through Westpac Master Trust or SuperWrap with a commencement date before 22 June 2012.
The group said the policies were “individually underwritten but offered under a group contract as disclosed in the policy document”.
“All types of commission on these group contracts must cease on 1 January 2021, as required under the legislation,” BT said.
As per legislation to remove grandfathered commission arrangements, BT said it would be rebating the commissions to customers.
“This legislation affects all life insurers that sold life insurance within superannuation under a group contract before 1 July 2013,” the group said.
ifa understands advisers with substantial amounts of revenue owing from the specific product lines were proactively communicated with prior to the changes being announced.
The move follows the removal of commissions from other major institutions’ products in line with grandfathered remuneration laws, including CFS super products announced in March.
While life insurance commissions are still allowed under LIF rules, some forms of insurance offered under group contracts have been caught by the removal of pre-FOFA grandfathering, which was a recommendation of the royal commission.
Something fishy is going on here. I’m led to believe they are retail policies, not group. BT are trying to blame the Government for this decision, but it is pretty obvious they are seizing on a bizarre interpretation of the legislation to seize the high moral ground with consumers, who are outraged with their rapidly escalating premiums? Throwing their trusted financial advisers under the bus doesn’t seem like a good strategy from where I sit, but good luck to them.
Is this a breach of contract?
In insurance application seems like a three-way contract between client, adviser and insurer. Advisers are required to sign off on these applications. The contract whither explicit or implicit is that the insurer remunerates the adviser from a portion of the premium on an agreed model of both upfront & ongoing commission. In fact the contract explicitly states the remuneration model chosen by the advisers, such as upfront, hybrid or level commission. The rates were explicitly known at the time of application and BT has upheld their end of the contract to date thus legitimising any implicit understanding.
Surely BT must buy out the adviser from the contract. Why does BT get to steal the advisers asset?
I’m looking forward to the likely class action. ASIC’s silence on this should open them up to a class action also. Their tacit approval of BT’s action as the regulator shows an inherent bias in their dealings as being anti-adviser.
I’m lucky my exposure to this product is minimal, however it’s a dangerous precedent and one I look forward to seeing challenged.