Financial advice to funeral cover: Key recommendations from the royal commission

Lending money to family members may seem like the best options but there are some things that people should first consider. Source: Getty

After 68 days of hearings, 130 witnesses and more than 10,000 public submissions, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, led by Kenneth Hayne QC, wrapped up last week with the final report being published online on Monday.

Wrapping up the extensive public inquiry after more than 12 months, Commissioner Hayne slammed the financial sector in Australia for putting profit before the needs of customers.

“Rewarding misconduct is wrong,” Hayne wrote in the report. “Yet incentive, bonus and commission schemes throughout the financial services industry have measured sales and profit, but not compliance with the law and proper standards. Incentives have been offered, and rewards have been paid, regardless of whether the sale was made, or profit derived, in accordance with law. Rewards have been paid regardless of whether the person rewarded should have done what they did.”

A total of 76 recommendations were made by Hayne – with the government confirming it intends to act on all of them – along with 24 referrals to regulators for civil or criminal charges. Here are the key recommendations which may impact older Australians:

Financial Advice

Many older Australians rely on financial advice to help them navigate the difficult transition from working life to retirement and ensure they are getting the most out of their savings, shares or investments to allow them to live the way they’d like. But Hayne said the financial advice industry had “caused financial harm to clients and damaged public confidence in the value of financial advice”, leading him to call for increased transparency when it comes to services provided, as well as a clampdown on fees-for-no-service.

Some of the key recommendations concerning financial advice include:

  • All ongoing fee arrangements must be renewed once a year by the client
  • In addition to the above, advisers must clearly tell clients what fees they will pay and what services they will receive in exchange
  • Financial advisers must disclose their lack of independence to clients in the form of a written statement
  • Grandfathered commissions should be “repealed as soon as is reasonably practicable”
  • The cap on life insurance commissions should be “reduced to zero”
  • In three years’ time, there should be a review by Government in consultation with the Australia Securities and Investments Commission (ASIC)  of the effectiveness of measures that have been implemented


Many times of insurance are somewhat of a forced purchase, with Australians regularly taking out policies for everything from home and car cover, to travel and life insurance. However, the royal commission shone a light on the lack of regulation in place in the insurance sector compared with other financial services.

However, according to the Australian Financial Review, many of the changes recommended by the commission would depend upon the outcome of a review by ASIC in 2022, allowing the industry time to prepare for the changes.

Some of the key recommendations concerning insurance include:

  • Funeral insurance to be reclassified as a financial service, bringing it under ASIC’s regulatory regime
  • The handling and settlement of insurance claims, or potential insurance claims, to be redefined as a financial service
  • Insurance cold calling or “hawking” should be banned outright
  • A Treasury-led working group should develop an industry-wide deferred sales model for the sale of any add-on insurance products
  • ASIC should impose a cap on the amount of commission that can be paid to car dealers for the sale of add-on insurance.


The banking sector perhaps attracted the most attention throughout the royal commission, with the leaders of the ‘Big Four’ being subjected to intense questioning as part of the hearings process. Writing in his final report, Hayne said: “From today, the banking sector must change and change forever”.

Some of the key recommendations concerning the banking industry include:

  • Mortgage brokers must act in the best interests of borrowers; this is a new duty that would carry a civil penalty for adherence failures
  • Change the Banking Code to ensure banks work with customers who live in remote areas or are not adept in using English to identify a suitable way for them to access banking services
  • Mortgage brokers should be subject to the same laws that apply to financial advisers who give personal advice

Commonwealth Bank, Westpac, NAB and ANZ have since responded to the report’s findings and recommendations.


Hayne’s recommendations around superannuation apply more to those Australians who remain part of the workforce and are not yet accessing their funds as income. However, some older Australians may still be in work and contributing to their super accounts to set aside as much cash as possible in later life, or may administrate their own self-managed super funds.

Some of the key recommendations concerning superannuation include:

  • Hawking of super products should be banned
  • Employees should have only one default super fund
  • Deduction of advice fees from a MySuper account should be prohibited
  • Super trustees should be prohibited from “assuming any obligations other than those” related to being the trustee of the fund

What do you think of Commissioner Hayne’s recommendations? Did you follow the progress of the royal commission?

Important information: The information provided on this website is of a general nature and for information purposes only. It does not take into account your objectives, financial situation or needs. It is not financial product advice and must not be relied upon as such. Before making any financial decision you should determine whether the information is appropriate in terms of your particular circumstances and seek advice from an independent licensed financial services professional.

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