Commission regulation 'not the answer to churn'

Australia’s Financial System Inquiry final report has questioned whether commission-based arrangements are suitable for the sale of life insurance products or the activities of stockbrokers.

The report creates scope for efforts to address problems within the risk industry to be given time to work but says if there is no progress, the Australian Government should revisit a ban on commissions.

PAA president Bruce Cortesi said no one would argue there was concern about churn of insurance in Australia or New Zealand. “But changing the commission model will not stop that happening.”

He said the discussion should start with product providers. “They don’t have to accept business that is replacement business from another company.”