Thursday 26th March 2015 - 4:07 pm

Life insurance report welcomed

by Alan Thornhill

The Federal government has welcomed a new report which recommends a crackdown on abuses in the life insurance industry.

The report, ordered by the Financial Services Council, was delivered by John Trowbridge, a former banking regulator with the Australian Prudential Regulation Authority.

It follows concerns raised by the Australian Securities and Investments Commission.

The Trowbridge report acknowledges conflicts of interest are compromising the sector.

And it said “misaligned incentives” which “influence the quality of life insurance advice require urgent attention.”

“It is up to the industry to take the initiative to respond positively to these recommendations,” the report says.

It makes 11 recommendations, including a $1,200 cap on upfront commissions for providing life insurance advice.

Mr Trowbridge said advisers should be banned from receiving benefits which might influence which products they suggest to customers.

The report also calls for a code of practice to be developed for the sector, similar to those that already exist for the general insurance and banking sectors.

The Assistant Treasurer, Josh Frydenberg, said the report makes “a significant and constructive contribution to improving the quality of advice for consumers.”

He said the government is already consulting with the industry and consumer groups on these issues.

It would consider the Trowbridge report in this context.

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Alan Thornhill

Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.

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