Treasury has released revised draft Corporations Amendment (Life Insurance Remuneration Arrangements) Regulation 2016 for consultation to implement the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016. The Regulation supports the reforms by:

• prescribing circumstances where benefits paid in relation to life risk insurance products are considered to be conflicted remuneration. A benefit is conflicted remuneration if it is given to an Australian financial services licensee or its representative in relation to: a dealing in a life insurance product with a retail client; financial product advice provided to a retail client in relation to a life insurance product; or information given to a retail client in relation to a life insurance product;
• prescribing circumstances where ‘clawback’ does not apply, such as in situations where a policy is cancelled automatically due to the age of the insured or where a premium rebate is offered to encourage customers to take up a policy; and
• grandfathering benefits paid in relation to life risk insurance products issued after the commencement of the reforms, in circumstances where those products are substantially related to products issued prior to the commencement of the reforms.

The regulations:

• explicitly ensure that the reforms apply to the direct sale of life risk insurance products; and
• remove existing grandfathering and transitional provisions that are no longer required due to the revised reform commencement date of 1 January 2018 (including the provisions explicitly grandfathering adviser remuneration arrangements and providing a 12 month period during which stamp duties could be included in the calculation of commissions);
• apply the new requirements equally to all advisers regardless of employment arrangements.

The revised regulations enable the reforms to apply to both advised and direct sales of life risk insurance products.