ISA calls for ‘rigorous’ reforms amid CBA scandal

Industry Super Australia (ISA) is reiterating calls to ban commissions on life insurance, saying consumers will continue to get hurt financially until it is done.

In response to Fairfax Media reports which uncovered errors in CommInsure's handling of claims, ISA said commissions on life insurance should be banned and a rigorous code of conduct should be developed.

"Banks and insurance companies must now show the necessary leadership," said David Whiteley, ISA chief executive.

"These scandals are causing harm to the Australian public, often when they are at their most vulnerable. It's incumbent on the banks and insurance industry to place the interests of the public first.

"These scandals build on an ASIC report 18 months ago which revealed extensive illegality in commission-driven sales and other cultural problems in the life insurance industry," Mr Whiteley said.

Banks and life insurers spent 2014 lobbying to "remove consumer protections" included in the FOFA reforms, he added.

"Now they're trying to water down consumer protection measures in the Life Insurance Remuneration Arrangements Bill currently before Parliament so they can continue to structure their life insurance businesses to maximise profitability," he said.

"Rather than lobbying to reduce consumer protections, they should grasp the nettle of reform and demonstrate genuine leadership."

Mr Whiteley added that the reforms currently before Parliament "fall hopelessly short" in addressing the problems.

"These reforms are weaker than those recommended by the Financial System Inquiry and the industry-commissioned Trowbridge report," he said.

"Capping upfront commissions and reducing ongoing commissions may be an improvement on current practices but sends a message that commissions are acceptable in the life insurance market. They are not."

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+2 #22 Jimmy Neutron 2016-03-29 11:15
Why isn't ASIC looking at the Trustees of these Union Super Funds for failing in their duty of care to existing members. When Australian Super was having a growing claims issue, why wouldn't they make it harder for new members to get cover instead of making it harder for existing members to get paid at claim time? The Duty is to EXISTING members, not to your marketing dept to make it easier to get NEW members.

Also interesting the reports that the Union Super Funds receive commission for clients that increase their cover above the basic AALs. What an absolutely hypocritical situation that would be if its proven to be true. Would love to hear Whitely spin that one.
+2 #21 joe 2016-03-09 14:59
Interestingly, not only is the FPA & AFA quiet on all this but also the supposedly ultimate consumer advocate voice 'Choice'.

Where are they now on all this?? I seem to recall they had a piece about how bad advisers were, with an inference that members simply using ISA funds are better off. How does that stack up now? My opinion is that they are nothing but sickening, contemptible, ignorant, arrogant here-sayers with no scruples- no wonder they are lurking in the shadows throughout all this. And if they rear their ugly heads, what is the bet it is to perpetuate this farce on the ISA side?
+8 #20 Andrew 2016-03-08 20:38
David you are a genius and not sure why you have not moved beyond your CE role in the ISA as surely higher honors such as working for Today Tonight, A Current Affair or even joining your ALP mates at Four Corners await for such a respected industry commentator?

Comminsure commissions caused all of this without a doubt and I don't know why you failed to mention the role they played in Global warming also?

Don't let the truth get in the way of a good story whatever you do...
+8 #19 DanK 2016-03-08 19:31
AFA, FPA & Consumer Groups. I urge you to call Mr Whitely out on his statement. How many of these denied claims were from his industry fund insurance arrangements? How many claims are denied as % from industry fund group cover Vs Fully advised retail claims? What is the link between advised commission based client and claims denied (positively or negatively correlated). My personal experience of 18 years in the industry is 0 legitimate claims denied. 0 Complaints (even those that were denied understood why...minor events that may have met trauma definitions but not severe enough and a TPD claim where doctors did not believe he was TPD...not the insurer). If ever our representatives have been handed a better opportunity to out the Industry(Union) Fund Movement as anti advice, anti consumer and conflicted I've not seen one.
+8 #18 Laurie Pennell 2016-03-08 17:20
The claims in question were made against CommInsure via Industry Super Funds. How is this related to commissions to advisers? I have recently had a PD session which showed how over the past couple of years Industry Super Fund premiums for insurance cover have been massively increased, whilst at the same time the terms and conditions for members have drastically reduced just shows how hypocritical ISA is. Having helped clients make a claim on their insurance policies I know they have been extremely grateful to have someone going in to bat with the insurance company on their behalf. I had a client who unfortunately developed a terminal illness. His claim under his personal risk policies was paid within two week of the claim being lodged. His claim under his policy within his Industry Fund was paid 8 months later, after he had died. Get your facts right before you continue your vendetta against financial planners.
+6 #17 Advice Professional 2016-03-08 17:17
Was David Whiteley a failed political aspirant in his past if so I believe he has improved his career prospect in politics with being out of touch with reality and oblivious to his own organisations actions in the case as described by other comments here.
The use of the argument of Advice Fees as a reason an insurer declines claims defies belief. David obviously has a big bow.
Would you be comfortable in advising the $'s paid to the industry funds to have CBA CommInsure as the insurer under the Hesta and other like funds also how are the issues going with Australian Super and Sun Super going on their insurance funds. No Adviser on these funds either but lots of "members' left fighting for their rights. I would suggest that the following would have been a more appropriate statement from David "These scandals are causing harm to the Australian public, often when they are at their most vulnerable. It's incumbent on the ISA and the Boards of the Industry Funds to place the interests of their members first above the fees they get for including rubbish insurance policies as their funds preferred insurer.

Well done David you have again highlighted the low intellectual capacity of those running the ISA to actually understand the issues behind such a simple case.
+2 #16 AJ 2016-03-08 16:04
Since when has David Whitely ever said something that even remotely resembles intelligence - why would he start now?
+9 #15 Ben 2016-03-08 14:44
Come on guys, give him a break. ASIC has bashed advisers for the last 7 years, successfully diverting attention away from their own incompetence. Why can't David Whitely use the same tactic when one of his Industry Funds is embroiled in a scandal?
+12 #14 Rob Coyte 2016-03-08 12:57
Statements like this by David Whiteley deserve to be treated for what they are....self serving propoaganda devoid of facts and real solutions.
+11 #13 Nick 2016-03-08 12:39
What a absolutely stupid comment to make Mr Whitely. What has commissions got to do with the CommInsure Claims scandal? The biggest irony is, whilst CommInsure gets done for this scandal, LIF reforms further work for CommInsure, and against clients best interests! What an absolute shambles. LIF reform must be put on hold NOW, until the FACTS come out and FSC can be exposed.
+9 #12 Reality 2016-03-08 12:26
I really hope that someone like the AFA or FPA come out and corrects these statements... Redirecting the blame where it should be cast...

This slander is ridiculous.
+11 #11 the patriot 2016-03-08 11:50
Once again the ISA is drawing a long bow between commissions and bad practice....whe n it is the culture and behaviour of, in this case CBA, that is at fault. Commissions are actually preferred by clients when the life companies will not reduce the premiums sufficiently to make it worth the clients choosing the fee option. Then the ISA also brings the severely flawed ASIC report as "evidence"...wh at a croc.
+12 #10 Joe 2016-03-08 11:48
Whiteley the hypocrite rearing his ranga head at any cheap media grab opportunity - he doesn't care if the diatribe he espouses is utter BS as long as he gets his minute in the spotlight and is bagging advisers and the advice industry.

Adam P is completely correct that the 'group' insurance universe of ISA funds has caused the majority of these issues, but he happily sweeps that under the rug while lambasting the only group (us) that actually looks into policy conditions for clients. Insanity, self delusion or utter lies & vested interests, you decide.
+14 #9 Insurance professional 2016-03-08 11:47
All 4 claims that CommInsure rejected had NO adviser involved. If they did, the claims would have been paid. These were mainly group insurance claims like those from ISA funds. David Whiteley has made a factually incorrect comment.
+12 #8 No way ISA 2016-03-08 11:31
Not one case in last nights story mentioned that the client had received advice from an adviser. In fact I believe most of the cases discussed were resultant from industry/corpor ate super plans where there is no, or limited, advice. The ISA has some nerve bringing up the commission debate on the back of a story that highlighted issues their own funds have when it comes to protecting everyday Australians.
+10 #7 Another Mad Planner 2016-03-08 11:27

It is now official that I am a MORON for reading anything that David Wheteliy has to say expecting it to be anything that makes sense!
+7 #6 Scott 2016-03-08 11:20
I turned onto the show part way through to see how a member of Hesta couldn't get paid. Not sure how this relates to commissions. In reality LIF is a simple transfer of profit from advisers to the corporates so this improves the profitability of the corporates, the opposite of what this bloke is saying.
+10 #5 TS 2016-03-08 11:20
Interesting that the Fairfax media report predominantly showed the flaws of "unadvised" group insurance (including industry super funds) and institutional failure. However, Mr Whiteley again points his finger at commissions to advisers.

Quality advice will provide a quality outcome.
+18 #4 Full Disclosure please 2016-03-08 11:18
Interesting comments from David Whiteley. Tell us David, when negotiating for insurance tenders for your industry super funds, the hefty commission (you probably call it a profit margin) that is paid to the industry fund, you think that is ok? Why? because you use it to help your members? Funny how that is no different to the service advisers provide to their clients, yet you stand and preach on a very high horse. Don't even get me started on related payments to union officials or to board that elect directors wth no industry experience. When you say for our members, I think you mean members of the board. Public companies have to disclose related payments but not industry funds. How about we jump up and down about this.
+13 #3 Paul Dunn 2016-03-08 11:11
How about Mr Whiteley looks in his own backyard and understand the fact that many of his ISFs will happily debit insurance premiums from member accounts, only then to refuse to pay out a claim (for benefits the member has paid for) in the event that contributions havent been made or received into his funds.

Cant see how an adviser is paid (fee or commission) for doing the work to insure a client directly correlates with the ability of an insurer to refuse to pay out on a claim that it should have underwritten properly from the start

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