FSC launches commission investigation

FSC chief executive Peter Neilson said the report, to be prepared by consulting actuaries Meville Jessup Weaver (MJW), would suggest remedies for any misalignment of incentives between advisers and their clients, that it uncovered.

The insurance industry is in the process of responding to an information request from the Financial Markets Authority, looking at the issue of churn – when policies are switched for the benefit of salespeople, not customers.

Churn, and the role of commission in it, is also being debated as part of the review of the Financial Advisers Act. Submissions to the issues paper for that review closed this week.

Neilson said: “We expect the MJW independent report will identify possible solutions for these issues. The FSC aims to have its own firm recommendations available by the time we submit on the Financial Advisers Act Review proposals later this year.”