Both the major general insurance associations have called for the Federal Government to exempt brokers from a ban on accepting volume-based shelf space fees on platforms.
The Insurance Council of Australia (ICA) and the National Insurance Brokers Association (NIBA) have made the call in their submissions to the second Future of Financial Advice bill.
The bill plans to ban all volume payments to platforms and has not exempted the general insurance industry.
This omission was pointed out to NIBA by insuranceNEWS.com.au when the bill was introduced into Parliament last month (insuranceNEWS.com.au October 10).
ICA argues the ban on volume payments in the explanatory memorandum to the bill states it only applies to product-issuers or fund managers on administration platforms.
“Given the broad definition of ‘volume-based shelf space fee’ it could catch a licensed insurance broker or other licensed entity in the general insurance industry that operates a facility through which brokers can obtain information about financial products,” ICA says in its submission.
NIBA has taken an almost identical stand in its submission on the bill.
“Given the broad definition of ‘volume-based shelf space fee’ it could catch a licensed insurance broker or other licensed entity in the general insurance and life risk insurance space that operates a facility through which brokers can obtain information about financial products,” the NIBA submission says.
The two associations also seem to be in total agreement why brokers should be exempted.
“This ban was not intended to operate in relation to general insurance and this provision needs to exclude general insurance in the same way as proposed above in relation to conflicted remuneration,” ICA says.
“This ban was not intended to operate in relation to general insurance and standalone life risk insurance and this provision needs to carve out such insurance in the same way as proposed by NIBA for the conflicted remuneration,” NIBA’s slightly modified version says.
NIBA says if the ban is applied to brokers and life insurance advisers, it would be against what they were told by Government and Treasury in consultation meetings with the industry.
