Effect of commission changes on your business

Current indications are that the Ministry of Business Innovation and Employment (MBIE) review of the financial advice sector will involve some controls on the maximum levels of commissions.

These controls have recently been imposed in the UK, Australia and Singapore. Some sectors of the New Zealand insurance adviser industry have made alarmist comments about the impact of commission controls on adviser profits and consequently the number of industry participants.

Given that New Zealand is heavily underinsured in the area of personal risk, it is vital that any reform of insurance commissions does not decrease adviser income.

It needs to be noted that the general insurance sector has had lower upfront commissions and higher trail commissions for decades, with no adverse impact on the number of industry participants.