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Through its investigation ASIC found there was an “unacceptable level of failure” in the life risk sector.
The corporate watchdog found that commissions were potentially skewing the advice that financial planners were offering, stating that “high upfront commissions are more strongly correlated with non-compliant advice, including situations where the recommendation is to switch products”.
Mortgage Choice general manager financial planning Tania Milnes said ASIC’s findings validated the Mortgage Choice ‘paid the same’ initiative and the company’s decision to mandate the hybrid commission structure for all practices in the network.
“These findings further reinforce our decision to build the business model from scratch, so we didn't have to change adviser culture and deal with any legacy issues,” Ms Milnes said.
“At Mortgage Choice, we have mandated the hybrid commission structure across the group for insurance advice, and our advisers are paid the same commission regardless of which insurance product their customer chooses from our panel of insurance providers,” she said.
Ms Milnes said the model mirrored Mortgage Choice’s broking business, whereby brokers are paid the same rate of commission regardless of which residential home loan a customer chooses.
“By taking a ‘paid the same’ approach to our insurance products, we ensure our customers receive the right product for their needs,” she said.
In its report ASIC urged all adviser groups to introduce a remuneration structure that supports good quality advice that prioritises the needs of the client.