60% hybrid forms basis of Life/risk solution
Life/risk advisers will get a three-year transition to a new, hybrid remuneration regime based on a 60 per cent upfront commission applicable to the first year from 1 July, 2016 and a maximum ongoing commission of 20 per cent of the premium in all subsequent years from 1 January, next year.
The new regime will be transitioned into existence as follows:
- Maximum total upfront commission of 80 per cent of the premium in the first year of the policy from 1 January 2016.
- Maximum total upfront commission of 70 per cent of the premium in the first year of the policy from 1 July 2017.
- Maximum total upfront commission of 60 per cent of the premium in the first year of the policy from 1 July 2018.
- Three year retention (‘clawback') period, to commence from 1 January 2016 to apply as follows:
- in the first year of the policy, to 100 per cent of the commission on the first year's premium;
- in the second year of the policy, to 60 per cent of the commission on the first year's premium;
- in the third year of the policy, to 30 per cent of the commission on the first year's premium.
The new regime is the result of a regime taken to the Assistant Treasurer, Josh Frydenberg this week and ratified by the minister overnight . It represents a solid outcome for the Association of Financial Advisers (AFA) which had argued consistently for a three-year transition to the new arrangements.
Announcing the new regime, Frydenberg said that he was pleased that the industry had been able to deliver on the changes rather than having the Government act unilaterally.
For its part, the AFA said it was generally supportive of the position which had been reached with chief executive, Brad Fox, saying that while the framework was challenging, he believed it was workable.
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