The Federal Coalition will continue its support for retaining life insurance commissions, citing UK moves to exclude them from its retail distribution review.

Shadow Assistant Treasurer Mathias Cormann told the Financial Services Council Life Insurance Conference in Sydney last week that the UK regulators “went down that path and found it not a good idea”.

“Banning commissions on life insurance will not deal with [Australia’s] underinsurance.”

Senator Cormann says the coalition is opposed to “any unnecessary regulation like banning commissions” and also opposes the proposal for people to opt-in each year with their adviser to continue the relationship.

“Opting-in will force people to re-sign with their adviser each year, and that is a hassle of questionable benefit,” he said.

“We are surprised at the Government’s rationale, as it is not driven by the need to address the problem of underinsurance.”

Senator Cormann accepts the industry argument that there are no life insurance product conflicts when paying commissions.

“If you take away life insurance commissions, it will make the upfront fee very expensive,’ he said.

A coalition government would be careful not to overburden the financial services industry with regulation, he says.

The industry superannuation funds have been leading the push to ban financial adviser commissions and Senator Cormann is concerned segments of the industry can dictate government policy.

“We have to be careful of any reform being hijacked by a particular sector,” he said. “We do not want some regulatory reform favouring one group rather than helping all Australians.”