Competition cited as a reason to cut commission

The suggestion is believed to be part of the Melville Jessup Weaver report into the insurance industry, being prepared for the Financial Services Council.

The report is rumoured to say that the bank distribution model is more profitable than the life insurance companies' model that pays commission. Bank staff usually receive a salary with bonuses for sales.

Many insurers pay up to 200% upfront commission to advisers.

Some offer less, such as Fidelity, which pays a maximum of 100% upfront plus renewal of 6% and 4% of ongoing service commission.