In ClearView’s response to questions on notice from the Parliament Joint Committee inquiry into the life insurance industry, it said the shelf space fees of dealer groups under AMP – AMP Financial Planning, Hillross and Charter – total some $500,000.
Securitor Financial Advisers, under Westpac/BT Financial Group, has shelf space fees of around $150,000, while Aon Hewitt Financial Advice has around $80,000.
For Professional Investment Services (PIS), under Centrepoint Alliance, shelf space fees total approximately $100,000.
ClearView said the insurers’ ‘pay to play’ model results in a burden that is passed back to policyholders.
“Vertically-integrated institutions use restricted approved product lists (APLs) to influence advice and channel customers into in-house products,” it said.
“Therefore, not only do consumers foot the bill for the impact of shelf space fees but many are unknowingly receiving poor quality, conflicted advice.
“Furthermore, the cross subsidies between institutional insurers and their licensees create inefficiencies in the system which can only be detrimental for consumers.”
Previously, ClearView managing director Simon Swanson told the committee about the major conflicts of interest surrounding approved product lists, including shelf space fees.
“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.”
And what disclosure is made of these different shelf space bribes ? ZERO
This article is ill informed and it’s rich for Clearview to talk about vertical intergration or conflicted advice. They built a business by offering shares to advisers and then allowing them to churn their books of CommInsure business over.
Many of the dealer groups mentioned in the above article have no shelf fees and their insurance APL’s are totally independent of any monetary contribution made by product manufacturers.
It makes your blood boil! We knew this was common practise out there no matter how well secreted it was by the offending parties. It’s already been commented on ad nauseam, just how much the FSC has allowed the NON-aligned adviser to be used as the scapegoat for all their questionable past & ongoing practises & self created industry ills. The Bombora-Licensed adviser commenting as well today has simply stated it yet again. I said last week how the FSC will regret alienating the NON-aligned adviser market by ‘jacking up’ their premium rates. AMP by up to 30%, but they’re NOT alone. Who but a long standing, reputable, qualified and learned adviser would have any hope of ‘selling’ these increases? We all know the real reason they are doing tit – to empty out their legacy books. You sow what you reap!