Speaking at last week’s Finsia conference, ASIC senior executive leader, financial advisers, Louise Macaulay said risk advisers are about to come under the regulatory microscope.
“We are embarking on a major surveillance of life insurance advice to review and assess whether advisers are acting in the best interests [of clients] when advising around changing policies,” Ms Macaulay said.
“We will be looking specifically at instances of churn where there is excessive switching between policies in order to maximise upfront commissions and the client is not left any better off.”
The regulator expressed concerns that the risk specialist advice sector may be more susceptible to cases of “inappropriate advice which has a detrimental impact on consumers”.
While product commissions for risk products have not been banned outright by the FOFA reforms, the fiduciary duty imposed on financial advisers under the regime should help stamp out instances of churning, Ms Macaulay said.
“The bottom line is that while commissions might not be banned, other FOFA obligations such as best interests do apply,” she said.
ASIC will also be engaging with insurance providers to investigate the ways they offer remuneration to advisers that may be churning, she added.
What a joke , it is time for some Constructive open discussion between ASIC and some of the Experienced Advisers in the market , the so called problem of churning could be solved smoothly and with all parties involved. I recall reading a terrific and very factual article by one of our Industry Leading Advisers Mark D , if ASIC and Insurance companies are serious about tackling this so called Churning issue get together some experienced advisers and solve the problem. Maybe level Hybrid commissions would reduce the problem.
As already commented, why spend all that money on a task force. Get one person on the phone to each insurance company and ask… they have the information at hand.
Then, who is behind this? Who is driving the investigation and for what reasons? Any industry funds involved?
All part of the push to make Advice to expensive… and thus left to no advice.
We will be looking specifically at instances of churn where there is [b]excessive switching[/b] between policies in order to maximise [b]upfront commissions[/b] and the client [b]is not left any better off.[/b]Ms Macaulay said. One again – allegations without facts – the insurers can collate the facts. Ask a few simple questions with yes no answers on every new policy!! Not rocket science.
The insurers can give you the information as to who the churners are without blinking – so why not ask them for it and remove these advisers from the industry or place them on level comm only. Simple really if you think about it – doesn’t take a task force and millions of tax payer dollars to achieve the outcome desired. IF IN FACT this is what they want to do – or is there another agenda?? We know there is – just remove upfronts and run with reasonable hybrid and level comm if you believe this is the cause…..
I have been expecting this. It is part of the plan to eliminate or limit commissions.
They already have their outcome in mind. They will find a few cases to prosecute,use churn as a reason to try and legislate level commissions on the way to elimination.
ASIC, Choice and the Industry funds all work together on this. Be prepared for media reports of clients being ‘dudded’ in some way by ‘unscrupulous’ insurance advisers.
It is to be hoped that the new government purges ASIC of it’s industry haters.
Here we go again. We all know the outcome. asic have a solution, now they need to manufacture the problem. Tell us another good fairytale please ASIC! The truth and you know it is that we know our clients far better than you do ASIC, because we engage with them. we know their spouses, we know their children. How come you think you can determine their needs, affordability, etc. better than we can when we have been looking after them personally for 15-20 years and you spent less than that in minutes reading an SOA?
If clients aren’t complaining & agree to a changed policy, where is it coming from exactly? This is the insurance companies beating the drum so often & loudly that they have the ear of the keystone cops, sorry mean ASIC, (ASIC – Asinine Senseless Increased Compliance). The companies themselves could stamp it out if they blacklisted advisers who they know are churners… but none have the nads to do so because they don’t want to miss their piece of the pie. Personally would prefer an adviser who took the time and discussed potential advantages of changing policies, even if it is changing policies reasonably regularly rather than the opposite. Worked with an idiot in Cairns that promotes himself as an K “Insurance Broker” but boasted that he hadn’t seen some clients for over 10 years but still picks up trail comm! So you tell me if that isnt as bad for clients!
Riddle me this–under best interest–if a new client has a policy that should be a level premium- it is stepped–and has other issues-possible not fully under written- is changing this policy a churn or acting in the client best interest. Answer please!!!
Sadly, if ASIC are on the witch hunt then the best worded SOA can still be proven to have “churn intent” and they will make up a good enough reason to find a “breach” then hang the adviser. Why can’t they just leave our industry alone for once we copped it enough under Labor, now this!?!
How can these incompetents hope to prove it? Insurance is such a subjective area and the policy conditions so open to interpretation that there is little liklihood they can do so, esp with a well worded SOA.
Rtaher they would be better off chasing advisers who only specifically use 1 or 2 specific companies only for all their clients and do little background research or software based comparisons, and then leave them there ad infinitum. Know quite a few of advsiers who take that approach and especially there are a number of groups out there that wrote the old Lumley now TAL policies that ‘guarantee’ the trail comm will always go to the introducing adviser regardless if they change advisers or even go to jail! So what incentive have they got to ever renew or update away from that older policy even if it is in the clients best interest???