Clockwise (from top left): Don Trapnell, Simon Swanson, Wayne Handley and Michael Downey

Shadow financial services minister Stephen Jones’ change of heart on commissions has been welcomed by the industry as a big step forward in the quest to keep the insurance advice sector alive.

At a Financial Services Council breakfast on Tuesday morning Jones said he no longer intends to ban commissions after “deep engagement” with the industry. The issue is “more complicated” than he first thought, Jones revealed.

Synchron director Don Trapnell welcomed the move, saying both political parties need to “get off the fence and say what they really mean”.

“Both Jones and Hume are saying they’ll wait for the advice review before we make a decision on risk insurance commissions,” Trapnell tells Professional Planner. “They need to have the balls to get up and say what they really mean because we will continue to lose advisers in the risk area if they don’t.”

Jones was a guest in the Synchron office last year, Trapnell says, and seemed to have a strong grasp on the industry.

“He did listen and give his views. Certainly the advice we gave and that he received from others has impacted his stance.”

Jones, Hume and shadow treasurer Jim Chalmers all delivered promises of “stability and certainty” in separate speeches at the SMSF National Conference in Adelaide last week, but sharp policy u-turns such as the education carve-out have left many in the industry confused or angry with sudden changes.

Moving caps

Life insurance commission rates in Australia are capped at 60 per cent upfront and 20 per cent ongoing, which Trapnell says doesn’t cover the cost of giving advice.

Provider ClearView supported the current status quo for commission levels which it deemed “appropriate”, but said to Professional Planner previously it is an issue of choice for consumers.

Clearview chief executive Simon Swanson says Jones’ announcement will have no impact on the group’s potential submission to the advice review.

“It will certainly be encouraging for all participants and segments of the industry to put forward well thought out, congruent arguments and if that happens we should end up with a good review,” Swanson says.

“Then the government – whoever it may be – will take it seriously. The bias is to ensure customers have access to affordable quality advice; that’s the objective of all of this and we all need to keep that in mind.”

Swanson says it’s important to have an “unemotional conversation” around the issue.