The Government has released revised draft regulations for the Government’s life insurance remuneration bill reintroduced into Parliament last week. They include some important changes:
- Extending the caps on hybrid commissions and the clawback provisions to benefits given in relation to dealing in or providing information about life risk products – as noted in our previous release this is a significant extension of the regime which will require a review of all distribution arrangements and affect platform shelf space fees
- Removing the transitional relief for calculating the cap on a stamp duty inclusive basis and for employee arrangements, presumably because of the additional time to comply with the new regime with the commencement date being extended to 1 January 2018
- Extending clawback exceptions including where:
- the policy ends due to death from any cause (previously only suicide) or any administrative error (previously only a misdescription of the policy owner or life insured)
- premiums are reduced because of a reduction of any risk relating to the life insured (previously just a reduction in health risk), a benefit has been paid or there has been an administrative error
- Extending grandfathering where a policy is acquired after 1 January 2018 as a result of cancelation of a pre-1 January policy due to administrative error.
Copies of the draft Corporations Amendment (Life Insurance Remuneration Arrangements) Regulation 2016 and its draft Explanatory Statement are attached – these are marked versions showing the changes made since the version released in April this year. The revised draft of the Regulation can also be found here. Submissions on the revised draft close on 4 November 2016.