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Australian Unity Personal Financial Services moves to mandated hybrid or level risk insurance commission structures

Media
18 Jun 2015
Advisers associated with Australian Unity Personal Financial Services will only be able to recommend hybrid or level risk commissioned insurance policies to clients from 1 July this year.

Mr Steve Davis, chief executive officer of Australian Unity Personal Financial Services, said the licensee canvassed this proposal at their recent professional development days and it was carried unanimously by their advisers.

Mr Davis said it was also carried unanimously by the members of their Adviser Forum.

"Those results were no surprise because we have been actively encouraging our advisers to adopt hybrid commissions for the last four years and the majority of risk insurance business placed by our advisers has been on a hybrid or level commission structure for quite a while now," Mr Davis said.

"While we probably could have brought this policy in a little earlier, we felt this was an important decision and we wanted to take the necessary time to fully inform and consult with our advisers and our Adviser Forum, before making any changes that might affect their businesses.

In terms of the Trowbridge report, Mr Davis said he had two concerns on behalf of Australians.

"Firstly, given the proposed Trowbridge changes potentially represent a significant reduction in acquisition costs for insurers, we have been surprised there appears to have been no suggestion that consumers will benefit from lower premiums.

"Secondly, if the Trowbridge recommendations are implemented, will that lead to a potential reduction in insurance advice provided to Australians?

"If it does, the flow-on economic consequences of under-insurance could have tragic consequences at an individual family level and could create significant economic costs to the community.

"This is one of the other reasons we believe utilising a hybrid commission model is lower economic risk than the proposals within Trowbridge.

"The impact of moving to this model would be able to be assessed over time to see what impact this, together with the introduction of the FoFA regime, would have on the quality of advice issues that were raised in ASIC's report of last year," Mr Davis explained.

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