ClearView has outlined how large dealer groups use approved product lists to extract shelf space fees from insurers, calling the practice “a straight bribe”.
Speaking at the parliamentary joint committee on corporations and financial services life insurance inquiry in Sydney last week, ClearView Wealth managing director Simon Swanson outlined the major conflicts of interest surrounding approved product lists, such as shelf space fees, volume based bonuses and consistency bonuses.
“Well, basically you go along and you pitch to a company your credentials as a product provider and they will say, in some cases, the fees are up to $650,000 per annum, in some cases, $80,000 per annum and so on. It’s just a straight bribe,” Mr Swanson said.
“It should be neutral where the product is placed based on the needs of the customer.”
Mr Swanson said ClearView — which also has an insurance arm — has 100 per cent open product lists, but conceded that its products won’t be the best for every customer’s circumstance.
He emphasised that other deal groups are not doing the same thing.
“We pay no bonuses to anyone for volumes or consistencies and we pay no shelf space fees and that is why we have been excluded from a number of companies’ approved product lists.
“I made the observation in the results we announced to the ASX yesterday we’re now on 293 boutique licensees or dealer groups on their approved product lists but we can’t get onto the big ones because we refuse to pay shelf space fees.”
Mr Swanson reiterated his criticism of FSC around the issue of APLs, saying it has made no progress in the last 18 months.
He also noted that the Trowbridge report recommended half of insurers should be on APLs.
“I have no idea how Mr Trowbridge came to that conclusion,” Mr Swanson said.
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