The Government has released the exposure draft Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2015 for consultation on regulation of retail life insurance commissions. Background.

Under the proposed legislation benefits paid in relation to life risk insurance products (including commissions and volume based payments) are subject to the ban on conflicted remuneration, unless they satisfy the criteria in an ASIC instrument.

The Bill gives ASIC the power to create an instrument specifying the percentages of acceptable commissions in the first and subsequent years of a policy, and the amount which will be clawed back over a two year clawback period.

The amendments will take effect from 1 July 2016 or the day after Royal Assent, whichever is the later, with transitional provisions until 30 June 2018.

It is proposed there will be a maximum total upfront commission of 80 per cent from 1 July 2016, 70 per cent from 1 July 2017 and then 60 per cent from 1 July 2018.