Appearing at the House of Representatives standing committee on economics hearing into the insurance industry, AFCA chief executive David Locke said the authority had received 473 complaints relating to the coronavirus crisis across the super, banking and life insurance sectors.
“A lot of the banking matters relate to financial difficulty, although we are conscious of the big efforts some of the large banks have made to defer payments,” Mr Locke said.
Facing questioning around why the authority had chosen to extend the usual response times for financial firms during the crisis, Mr Locke said the inability of many firms to get call centre staff in particular to work had meant that it was “not realistic” for consumers to expect a response to their complaint in the usual time frame.
“We have to recognise that the banks have had over 500,000 requests for financial hardship in a very short period of time,” he said.
“Some insurers have been hit with the closure of offshore contact centres and high volumes of matters coming through. It serves nobody’s purpose if we are maintaining deadlines that are consistently unachievable, because from a consumer perspective it’s not going to come through realistically in the expected period of time.”
Mr Locke said AFCA welcomed the letters sent by ASIC to life insurers on Monday, urging them to proactively offer consumers alternatives if they were unable to pay premiums due to financial hardship.
“We talk to ASIC on a daily basis and with APRA regularly as well, and we know it’s really important for the industry and consumers to have consistency of practice,” he said.
Appearing later in the day, Clearview managing director Simon Swanson said the insurer had received over 300 requests for either temporary premium waivers or suspension of cover due to financial hardship.
“We’ve had one customer who died [as a result of COVID-19] in our super fund and their beneficiaries will be paid out, and we’ve also had about 250 people require premium waivers,” Mr Swanson said.
“I should also say we have an offer where we can suspend cover for 12 months, that doesn’t provide cover during that period but it means you can come back on cover after 12 months and not go through underwriting, and we’ve had 74 people ask for that.”
Mr Swanson added that the group’s super fund had seen over 150 withdrawals through the government’s early access scheme, totalling around $1.5 million.
Wow!!! Mr Swanson announces that the Fund paid a death benefit. How generous, anyone would think it was their money. Super is a trust account dopey!!
the thing which bothers me the most is that regulator has enabled a culture of (easy) complaint which means that some people lodge a complaint just because they can, rather than for any real or meaningful reason or desired outcome. I am of the opinion that there needs to be some consequential cost to the complaint where it is found that the complaint is spurious and without merit, and / or is vexatious. but I doubt much will change
What also happens is that if a complaint has absolutely no merit, the financial firm will often offer the complainant cash to settle the complaint, because if the complaint is not settled to the client’s satisfaction then AFCA have to investigate it and issue a Determination, which costs the financial firm $10,000 (ie AFCA invoice the financial firm $10,000 for the privilege of investigating the complaint).
It is blackmail and clients have nothing to lose and everything to gain by lodging a complaint. I know….I defended bank advisers against FOS/AFCA for 3 years.
Interesting comments by GPH and Mr T, a bit of further clarity.
Not all complaints to AFCA are invoiced to the financial firm, super and insurance is covered in the annual subscription, but yes, in certain cases a quick settlement is much better than a a potential AFCA determination cost.
To a certain degree, the new complaints regime certainly had an influence in recent insurance premium increases (Life, TPD and SCI claims complaints process is long), so to a certain extent, those currently insured are probably assisting in paying for complaints with no merit.
welcome to the new “Code of Ethics” world.. this is the new normal
So the Hayne collateral damage of all these orphan clients is now being realised ? How ridiculous that the trustees that got us into this mess are now seen to be the solution to look after the orphan clients ? Stay with us and save on fees is their new mantra with absolutely no disclosure on what service they will offer . Result = inability to service the orphan clients they keep and disengagement with advisers that are their key distribution channel. Plain dumb.
Yes – and they can still move thousands of clients from one superfund to another – with a simple letter. ie AMP moving super clients to National Mutual – presumably under some form of general advice / other “furphy” granted by ASIC. Imagine trying to do that as an AR / CAR
And without Best Interest Duty Obligations being met. What is more the trustees are revelling in their new found power to ensure that clients need to sign off each year to keep the adviser service fees being deducted. Clients are rightly saying who do they think they are ? This business model where advisers introduce clients to the fund manager who then encourage the client to dump the adviser each year and offer to keep the client without making any service offer is clearly not sustainable.
What a disappointment to see a sample of my peers put FASEA deferral above the ability of their clients to get a tax deduction for advice. Says it all really!!! Hang your heads in shame 36.7% of respondents (at time of writing). The rest of us want FASEA and education standards raised ASAP so as to rid our industry of advisers that can’t be assed to update and upgrade their skills. Covid-19 is just another excuse. Shameful.
A logistics nightmare for all stakeholders.
I love that Clear View sound like they are all about looking after the clients while on the quiet they are rolling out massive premium increases many of which are up to 35% for some clients even with a level premium.
all of the companies have been jacking up premiums – cut commissions and increase profits further
Don’t forget Cold-Call-Clearview flogged hundreds of useless policies to remote
indigenous people. They will do anything for a buck.
before anyone says it…. It’s the planners fault… right!?