As you may remember, the Bill was designed to limit the circumstances in which the conflict remuneration exemption on life insurance applied to retail life insurance products. Of note, the Bill capped upfront commissions and ongoing commissions on life insurance products, and introduced a ‘clawback’ regime for paid commissions on lapsed life insurance policies.
The Bill was set to commence on 1 July 2016. However, the Bill lapsed on 17 April 2016 as it did not reach royal assent before the session of Parliament was terminated. The Bill will likely be introduced in the future, but with a federal election looming this year, it is uncertain when this will occur. There has been talk of the Bill being reintroduced before July 2016, but this will depend on whether the Senate sits every day until an election is called.
Although advisers may be saying ‘phew!’ in response to the Bill lapsing, advisers should now treat this as an opportunity to prepare themselves for when the Bill is reintroduced. Reforming life insurance arrangements is a significant agenda item for the Federal Government and we don’t believe it will disappear. It would be beneficial to consider these issues now and prepare your approach in advance so you are not caught out.