Life insurers have given a cautious welcome to the Hayne royal commission’s final report and recommendations.

The report calls for grandfathered commissions to be repealed as soon as practically possible, and the Government says it will act from 2021. Existing commissions should be rebated to clients whenever possible from 2021, and the Government expects product fees to be lowered where rebating isn’t possible.

Under the Future of Financial Advice reforms, product providers could keep paying commissions on products sold before July 1 2013.

The Australian Securities and Investments Commission (ASIC) plans a review of life commissions in 2021 to determine if the commissions cap has improved the quality of advice.

Commissioner Kenneth Hayne recommends ASIC further reduce the cap, ultimately bringing it down to zero.

His report says funeral insurance should be included under the definition of financial product, allowing ASIC to regulate the sector.

It also recommends changing the Insurance Contracts Act so an insurer can only avoid fulfilling a life contract on the basis of non-disclosure or misrepresentation if it can demonstrate that it wouldn’t otherwise have entered into the contract.

MetLife says it is pleased the recommendations are designed to serve consumer interests and ensure the financial services industry’s long-term sustainability.

“Our industry needs to improve to meet community expectations, and while we’ve already made some important improvements to our own business, this can be the catalyst for a better, more customer-focused life insurance industry,” it says.

It says the commission paves the way for legislative change that will support the revised Life Insurance Code of Practice.

MLC says it welcomes scrutiny of the industry to drive improvements and foster understanding. A number of issues “can be characterised as misconduct or falling short of community expectations”, the insurer says.

A spokesman says MLC will continue to engage with key stakeholders and government as the recommendations are considered.

Suncorp CEO and MD Michael Cameron says the group is reviewing the report to better understand its implications, and will need to give due consideration to the findings.

“We welcome any measures that deliver improved outcomes for our customers,” he says.

Financial Services Council CEO Sally Loane has welcomed the report’s release and says the industry body will further consider it this week.