An issues paper seeking feedback on the conflicted remuneration exemption for general insurance and other issues has been released by Treasury as the Quality of Advice review gets underway.

“The review will consider whether the exemption from the conflicted remuneration ban results in poor quality advice and consumer outcomes, whether there are reasons to retain the exemption and whether there may be more targeted ways to address consumer harm,” the paper says.

Treasury is exploring a voluntary data collection with insurers to gather information about their remuneration and product performance across intermediaries for key retail products, and is also engaging with the National Insurance Brokers Association to collect information, the paper says.

Conflicted remuneration, broadly, is defined as a benefit which may influence the financial product advice given to retail clients. The advice may be either general or personal advice, the paper says.

Questions for stakeholders include, in life insurance, whether the capping of commissions has led to a reduction in the level of coverage or has contributed to underinsurance.

The paper also asks if underinsurance is “a present or emerging issue for any retail general insurance products”.

“What other countervailing factors should the review have regard to when deciding whether a particular exemption from the ban on conflicted remuneration should be retained,” the paper asks.

Independent reviewer Michelle Levy says the release of the issues paper is just the start of the consultation process and that she will be engaging with a wide range of stakeholders throughout the rest of the year.

“This review will consider how the regulatory framework operates holistically,” she says. “The framework should assist the people we entrust to provide financial advice to do so as effectively and efficiently as possible.”

Submissions on the issues paper are due by June 3 and a report will be provided to the Federal Government by December 16.

The paper is available here.