Shadow assistant treasurer and shadow minister for financial services Stephen Jones reaffirmed his view that insurance commissions are inherently conflicted and should be banned at the AIA 2021 Adviser Summit digital conference.
Answering questions during a fireside chat with conference host Andrew Klein, Jones took it upon himself to frontrun any questions about the Labor party’s stance on the issue.
“I think Ken Hayne used the analogy that you can’t stand with one foot in one canoe and the other foot in another canoe, you’ll end up in the water. And conflicted remuneration is a problem, that’s the position I start with,” Jones said.
“Now there have been sectors in the industry – mortgage brokers have been pointed out – who’ve been able to make the case for an exception to that,” he continued, before bringing up the corporate regulator’s scheduled 2021 review of the Life Insurance Framework reforms.
“ASIC is doing a review and I’m not going to pre-empt the result of the review. I said to risk advisers around the country if they can make the case as to why that starting position I’ve got is wrong then I’ll listen to it but I’m not going to state a position on any of those things till I’ve got the ASIC review.”
The remarks echo Jones’ comments at the Association of Financial Advisers’ national conference in October last year, where he signalled Labor’s preference to abolish insurance advice commissions if elected to federal parliament in 2022.
“I’ve got to say I start with a bias against it,” Jones stated then. “The burden lies upon the industry at large to prove that a commission-based sales model that’s attached to an advising sector is able to provide a service to consumers that is not conflicted… I think that’s an enormous challenge.”
Jones made it clear there has been no change in this mindset in 2021
“It’s pretty clear to me that if your getting a payment from the product manufacturer then there is the potential for your interest to lie with the insurer and not the insured,” he said.