ASIC urged to include super funds in life insurance probe

The corporate regulator has been encouraged by federal Liberal MP Bert van Manen to look into the role of superannuation funds as part of its industry-wide review of the life insurance sector, which will be launched in response to the CommInsure scandal.

During a hearing of the parliamentary joint committee on corporations and financial services on Wednesday, ASIC deputy Peter Kell said it was "his understanding" that none of the alleged victims in the scandal had received advice from a financial adviser.

ifa reported yesterday that ASIC will investigate the claims against CommInsure in addition to conducting a wider probe into claims handling across the life insurance sector to determine whether similar problems exist elsewhere.

Mr van Manen – a former adviser – urged ASIC to take the opportunity to scrutinise super funds' disclosure requirements and how these may impact members at claims time.

"I would suggest that it would be a critically important aspect to have a look at because a lot of people unfortunately don't pay a lot of attention to what's happening in their superannuation funds," Mr van Manen said.

"Will the report that you produce have some sound and solid recommendations that apply not only to the life insurance industry but to the superannuation funds that are getting paid handsome commissions for these group life policies that are very often not disclosed to their members?

"Is there a requirement for super funds to disclose the level of commission they receive from the insurance company? Why is that not the case when everybody else has to disclose what their remuneration is?"

Responding to Mr van Manen, Mr Kell said that this was "a good question to ask".

"I think that's certainly something we will take on board. We haven't thought through all of the details yet but in terms of our review of the wider industry, and looking at particular channels, that is certainly something that we can think about."

Mr Kell also explained that the issues raised by the CommInsure scandal were separate to the ones being addressed by the Life Insurance Framework.

"The reforms that are currently before the parliament relate to a different aspect of the life insurance sector," he said.

"Our report [on risk advice commissions] highlighted problems that we found around advice on life insurance [...] The issue there was not so much about claims handling."

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+5 #9 Dave 2016-03-18 15:40
IF this investigation is to be fair and properly compare the pair, someone in authority and a tiny hint of intelligence will see the massive short comings of ISA risk management. They accuse planners of gross negligence when this area of cover is the greatest rip off ever. just read the PDSs and see-REST just joined with paying the lower of term or TPD cover on terminal illness. Others have -get TPD-ICP cancels and the biggest furphy ever- being at work and there are a number of examples here where the families have been left destitute after term claims have been declined. TIME for ASIC et al to look at major issues and rip offs and false statements by ISFs and others. kell has an opportunity to show he is fair dinkim in his job
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+4 #8 Dylan Martin 2016-03-18 14:23
Liberal MP Bert van Manen - thankyou so much for standing up for us now and also before, we saw your video address to Parliament and appreciate it immensely. Agree wholeheartedly that industry super funds insurance should be put under scrutiny. It's going to be incredible when its uncovered that some of their definitions are near impossible to claim and there policies are such poor quality you could nearly cry.

As well known, ISF are in the game of accumulating FUM and insurance is NOT their main game, I cannot wait for ASIC with help of people that know what they are talking about to uncover the putrid lies and simple non-facts from the ISF.

Regards

Dylan Martin
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+7 #7 James 2016-03-18 12:30
Oh, so ASIC thought it worth investigating the potential conflicts between commissions AND advice (i.e. build up to LIF).

But they did not think it worth investigating the conflicts between commissions AND NO ADVICE (i.e. group life and super trustees).

For some reason the former seems to be a big problem whereas the latter not so much.

Hmmmmm........pull the other one....

(As an aside, why didn't the FPA and AFA raise this issue prior to the LIF proposal)
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+8 #6 Ben 2016-03-18 12:08
The Super funds choose the insurance provider, profit from the insurance, deduct the premiums without the members consent (in most cases) and they deal with the client during the claims process. They are up to their neck in this scandal, no question about it!
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+5 #5 Andrew 2016-03-18 11:34
David Whiteley from ISA thinks this is a great idea Bert and is looking forward to the next "Compare the pair" campaign which just became fair(er)...!
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+5 #4 Graham H 2016-03-18 11:01
This is a good start
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+8 #3 AJ Dann 2016-03-18 10:48
Cough!!!.spits coffee across desk!!! Head slap!!...did I just read that Kell said that "NO ADVISER WAS PART OF THE COMMINSURE ISSUE"..Gee what a revelation!!! Where is our man Whiteley and the golden girl Adele. Better still where is our beloveded FPA and ASA. Pretty sad when Kell who has misjudged and misconstrued the issue from the start is our defender not by desire but being forced to concede the truth for once. Anyone perhaps mention the actions of ISA funds or should I say lack of action and accountability. Seems that someone may actually accidentally stumble and fall on the truth one day as it sure as hell is being pointed out by anyone other than individuals on the Adviser side.
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+9 #2 Phil Thompson 2016-03-18 10:18
Sounds like Mr Van Manen is going into bat for the consumers asking for a wider review of the insurance industry and questioning super fund insurance commissions and lack of disclosure.

I'm also encouraging to hear Mr Kell acknowledge that non of the victims in the Comminsure scandal received advice from a financial adviser.
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+7 #1 The Observor 2016-03-18 10:14
Good on you Bert

At last someone prepared to stand up and speak publicly on what we all know to be the case

Hopefully the truth will finally be exposed !
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