Appearing before the parliamentary joint committee on corporations and financial services, Mr Kell was asked to comment on the assertion – reportedly published by News Corp Australia – that advisers within the Westpac network are subject to an approved product list featuring just one insurer.
“On the issue of approved product lists, I’m not sure that I can confirm that BT and Westpac only have one … I think we’d be a little surprised but we can take that under notice,” Mr Kell responded.
However, while unable to speculate on the specifics of APLs within the Westpac group, the regulator explained that the broader issue of product recommendation and incentives for financial advisers is currently a top priority for ASIC.
“We are currently doing some work, finalising some work, looking at how APLs work in practice and looking at whether advisers use the full range of products on an APL,” he said.
“I think there are two issues here: one is having a broad range of products on an approved product list, so products which are appropriately chosen to ensure they’re suitable for customers, but the second issue there is that even if you have a broad range of products on that APL, will the advisers actually choose from across those products in ways that are beneficial for the customer? So they’re both issues for us, and setting a simple rule like the Trowbridge rule won’t necessarily fix that second issue.”
Mr Kell said that ASIC is not of the position that there must be a certain number of products on a particular APL, but said there is a consumer expectation that advisers would have access to multiple financial products.
ASIC’s clarification of section 923A of the Corporations Act in June cast doubt over the ability for an adviser to legally describe themselves as “independent” while operating under an APL.
The necessity of APLs from the perspective of PI insurers is one of a number of arguments made in a white paper released by the AIOFP and Smart Compliance director Brett Walker seeking repeal of s923A.
ifa has approached Westpac for comment.
Does anyone else think it’s odd that the head of ASIC said he’s not sure how many insurance companies are on WBC APL and seems shocked at the answer of just 1. Yet just over a month ago they restated their stance on independence. Clearly they don’t have a grasp on the marketplace.We’re paying a lot in membership fees to the FPA and this message /distinction is not getting through. Must be the MIllions in dollars the FPA is getting from organizations like WBC to keep quite.
Sally Loan FSC Chair has been reported in the Australian as saying that an APL with at least 2 solutions would be appropriate!!!! Which two Sally the banks own house brand and one other, but which one? There are 12 insurers in Australia…An adviser has a duty of care to consider which product is the most appropriate …price being one consideration.
On the issue of price on the FSC web site they state that the main reason people opt out of life insurance is because of price!! SO how does the FSC react when one of their members Westpac allegedly, increases the price for 2 of their “DISTRIBUTION Channels” …their own clients “advised” by a branch adviser…” Advising on ONE product” and the banks call centre.
Peter Kell ASIC deputy Chair said “Financial advisers have a clear duty to act in the client’s best interest” (Reported in the Australian) …
Here is what should be happing if a SOA produced for a customer recommends a bank affiliated product, that should be disclosed and the SOA should show a comparison with one or more non-affiliated products to demonstrate that the affiliated product is more appropriate, price being one consideration.
The profile (CV) of the FSC CEO Sally Loane is publicly available at the FSC website.
Curious – are there others out there like me? Our dealer group is CBA owned, yet we have 7 insurers on our APL and able to use others outside our apl on a number of occasions without any issues. (Ie, my pre-assessments involve contacting 9 sometimes 10 retail insurers). If they are not able to use other insurers I would be surprised and worried. Actually, BT Life is a great product and we probably use this in most cases.
Sound the alarms- ASIC still does not know that some bank advisers have very limited risk APLs. Are these guys so ideologically blinded by the banks that they DONT KNOW. The banks constantly engage in third line forcing with loans and insurance, but the ACCC will NOT act without a client complaint and ASIC believes the banks are the blokes in white hats. For Gawds Sake – why would a bank employ a planner if it means their in-house products sit on the shelf
Hold on, wasn’t the ASIC review (that resulted in the LIF) supposed to solve this? There must be a log in their eye or something….
It’s not surprising at all that Westpac employees are only allowed to recommend Westpac’s insurance product. It is what consumers would expect. No one goes to a Toyota dealer to buy a Mazda.
What is surprising is that financial advice licensees with independent sounding names such as Magnitude and Securitor, are actually controlled by Westpac. Consumers would expect these firms to be independent and not have any slant whatsoever to Westpac products. Consumers are being deceived. This problem is not solved by FSG fine print disclosures or the farcical s923A. It can only be solved by preventing product companies from involvement in financial advice.
Well said – but it can also be solved by making all those “hidden” bank / Insurance company product flogging, deceiving dealer groups be made to clearly on their letterheads, cards, websites and front page of SoA – STATE THEY ARE OWNED AND RUN BY Bank / INSURANCE COMPANY.
I moved on from Westpac for that very reason. How could I believe I was providing quality advice for a client when I had only one insurer to choose from. BT insurance is a great product and their underwriting/claims process far superior to the majority but it doesn’t fit everyone!!
The big difference is that car manufacturers unlike life company’s do Not have a fiduciary duty to act in the best interests of a client,walk into any Westpac branch and the BT life Rep,that’s what Brian Hartzer calls them ,will politely explain they are only allowed to recommend one product.Makes a mockery of FOFA,,a complete repeal of LIF
Is required.
Totally agree when i walk into a ford dealership i know what to expect as i am conditioned. When i walk into an adviser’s office i expect to get appropriate advice and not appropritae advice on products manufactured by the bank, because why would i then be paying a plan fee.