Explanatory Memorandum
(Circulated by the authority of the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)Chapter 3 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016
3.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
3.2 The amendments remove the current exemption in the Corporations Act from the ban on conflicted remuneration for benefits paid in relation to certain life insurance products.
3.3 The Bill enables the Australian Securities and Investments Commission (ASIC) to make a legislative instrument to permit benefits in relation to life insurance products to be paid, provided certain requirements are met. These requirements relate to the quantum of allowable commissions and to 'clawback' arrangements, where a certain portion of the upfront commission is paid back to the life insurer by the financial adviser in the event that the life insurance policy is cancelled or the premium is reduced.
3.4 The Bill also applies a ban on volume-based payments in life insurance products and includes transitional (grandfathering) arrangements in the Corporations Act 2001.
3.5 An existing provision in the Corporations Act 2001 will be used to facilitate ongoing reporting to ASIC on policy replacement data. This data will assist ASIC in its scheduled 2021 Review of the new arrangements.
Human rights implications
3.6 This Bill does not engage any of the applicable rights or freedoms.
Conclusion
3.7 This Bill is compatible with human rights as it does not raise any human rights issues.