The Life Insurance Framework will apply to direct life sales, the Federal Government has confirmed.

Financial Services Minister Kelly O’Dwyer has released draft regulations that will operate in conjunction with legislation introduced to Parliament earlier this month.

“The revised regulations follow ongoing consultation with stakeholders on the reforms and establish a level playing field by applying the new requirements equally to all advisers regardless of employment arrangements,” she said.

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

“This maintains the integrity of the reforms by ensuring they apply equally regardless of distribution channel.”

The clawback period is now two years instead of three, and the regulations list circumstances in which it cannot be applied, including death of the insured, suicide, the client reaching an age limit on the policy and administration error.

A later start date for the reforms – January 1 2018 – has been put in place, with the transition arrangement that allows commission to be paid on stamp duty for one year scrapped.

Under grandfathering rules, the regulations will allow more areas of cover to be added to a policy after the framework start date, enabling advisers to still be paid commissions.   

But additional cover must be part of the original insurance contract to qualify.

Association of Financial Advisers CEO Brad Fox has welcomed changes in the draft regulations.

“The Government has listened to our concerns, especially for self-employed advisers, and we are pleased to see greater fairness in the timing and application of the regulations,” he said.

Submissions on the draft regulations close on November 4.