Mr Morris was an adviser with Commonwealth Financial Planning before blowing the whistle in 2008 on poor advice practices and culture in the CBA-aligned dealer group.
He also subsequently blew the whistle on ASIC after it emerged that it failed to act on a fax sent by whistleblowers for over 16 months.
Mr Morris claimed institutionally aligned Australian Financial Services Licensees (AFSLs) continue to funnel new clients into in-house products, potentially in breach of the best interests duty obligations in a new paper commissioned by ClearView on the consumer impact of APLs.
The paper, titled “Approved Product Lies: Combating the manipulation of advice,” claims that there is no reasonable basis to exclude from advice consideration any of the 12 retail life insurers regulated by APRA given they are all subject to strict capital requirements and all offer quality products.
Further, it partially attributes the distinct lack of innovation in life insurance to limited APLs which have shielded institutional life insurers from competitive pressures for decades and effectively mitigated against the risk of competition and evolution.
“In putting this paper together, it became clear that institutionally aligned AFSLs knew all the right things to say and how to look remorseful but scratch the surface and there have been no real changes to the culture and practices inside these organisations,” Mr Morris said.
“Heavily restricted life insurance APLs are still the norm and not even heat from the recent financial services royal commission has been enough to compel them to apply higher standards and put their clients first.
“If the nature, purpose and intent of the Future of Financial Advice reforms and the royal commission’s recommendations are to improve advice quality, address conflicts of interest and boost transparency to ensure a better deal for consumers then I don’t see how restricted APLs can coexist in the new regulatory environment.
“APLs are at odds with the government’s agenda and changing community standards, and it is time for unrestricted choice of life insurance provider to be mandated.”
ClearView managing director Simon Swanson said the findings by Mr Morris continue to raise major concerns about the advice industry’s structure, from the limited product choice available to consumers, particularly in life insurance; and the inability of the FSC to get its members to voluntarily adhere to high standards.
“It’s often suggested that people don’t deliberately act in bad faith but rather mistakes are made unintentionally,” Mr Swanson said.
“However, it is no accident that the vast majority of clients connected to an institutionally aligned financial adviser find their way into in-house products.
“If the regulator agrees that this is not a coincidence but rather the orchestrated outcome of flawed processes then they must act to ban restricted APLs.”
Hold the phone. Insurance sold within industry funds….no thanks unless it comes with a clear “‘JUNK INSURANCE” warning that is subject to no price guarantees so premiums can fluctuate +100% in a few years
Talk about relevance deprivation syndrome
Same happens when they get advice from Industry fund advisers they end up with and industry fund funny that… never seen a comparison industry fund vs industry funds
Not while AMP and the Banks are breathing ! Three banks signed 20 year deals with the purchaser of their insurer, in direct conflict with unlimited APLs.