3 December 2015
Media Release - #2015032, 2015

In the role of: Minister for Small Business and Assistant Treasurer [21 September 2015 - 18 July 2016]

Improvements to the Life Insurance Industry

Exposure draft legislation has been released publicly today to give effect to an industry reform package which will improve the remuneration arrangements in the life insurance advice sector, Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP said.

"This package will ensure that the interests of financial firms and consumers are better aligned," Minister O'Dwyer said.

"On 6 November 2015, I announced that industry had reached agreement on the implementation of these important improvements and the draft legislation is the next step in the process.

"The Corporations Act 2001 (the Corporations Act) will be amended to give ASIC the power to create a legislative instrument to set caps on commissions and implement clawback arrangements. Ultimately, the final form of ASIC's instrument will be a matter for ASIC, as the independent regulator.

"The Corporations Act will also be amended to ban other volume based payments and grandfather existing arrangements in a manner broadly consistent with the Future of Financial Advice reforms.

"The Turnbull Government has previously announced that ASIC will undertake a review of the reforms in 2018 and that if this review does not identify significant improvement the Government will move to mandate level commissions, as recommended in the Murray Inquiry report.

"Industry policy replacement data will be used to inform this review. ASIC will utilise existing provisions in the Corporations Act to facilitate licensee reporting of this data.

Interested stakeholders are invited to comment on the exposure draft legislation and explanatory material. Details on how to lodge a submission are available on the Treasury website. Submissions close on 4th January 2016.

Legislation will be introduced into Parliament in early 2016 prior to commencement of the reforms on 1 July 2016.

ASIC will undertake a separate consultation process on its legislative instrument in the coming weeks