Restrictions on Life Insurance Commissions

Independent Review – The Treasury

On 11 February 2016, the then Minister for Small Business and Assistant Treasurer introduced a bill into Parliament that restricts the commissions that financial advisers receive when selling life insurance products.

The changes are intended to better align the interests of financial advisers and consumers.

The Treasury certified that the Review of Retail Life Insurance Advice (ASIC Report), the Review of Retail Life Insurance Advice (Trowbridge Review), and the Financial System Inquiry Final Report (Murray Inquiry), as independent reviews that together involved a process and level of analysis equivalent to a Regulation Impact Statement (RIS). Under the Government’s best practice regulation requirements the Office of Best Practice Regulation (OBPR) does not assess the quality of independent reviews.

The Treasury estimated that the proposal increased average annual regulatory burden on business by $27.8 million. The OBPR has agreed to this estimate.

The Treasury was compliant with the Australian Government RIS requirements. However, the Treasury was not consistent with best practice at the transparency stage. This is because the independent reviews were not included in the explanatory memorandum of the bill.

• The Review of Retail Life Insurance (ASIC Report) is available on the ASIC website.
• The Review of Retail Life Insurance Advice (Trowbridge Review) is available on the FSC website.
• The Financial System Inquiry (Murray Inquiry) is available on the FSI website.
• Treasury Deputy Secretary Certification Letter [ 573KB]
• Treasury Deputy Secretary Certification Letter [ 399KB]
• OBPR Acknowledgement Letter [ 573KB]
• OBPR Acknowledgement Letter [ 399KB]