The compensation to 215 clients who were under ClearView followed a review and remediation program, according to ASIC.
Under this program, ClearView reviewed 4,269 advice files from 279 of its advisers and remediated clients who had suffered loss, with 215 clients offered $730,138 in financial compensation and 21 clients received non-financial remediation through reissued advice documents and fee disclosure.
ASIC said it first identified issues of non-compliant advice by ClearView’s representatives during an industry-wide review of retail life insurance in 2014.
“A sample review of ClearView’s advice files highlighted broad areas of concern such as inadequate needs analysis for client, insufficient explanation about the pros and cons of using superannuation to fund insurance premiums, inadequate consideration of premium affordability issues and poor disclosure about replacement products,” ASIC said.
ASIC said it raised these issues as well as some concerns related to the conduct of Jason Churchill, one of ClearView’s advisers at the time.
In 2016, ASIC accepted an enforceable undertaking (EU) from Mr Churchill for failure to meet his obligations as a financial adviser.
Under the EU, Mr Churchill agreed to undergo additional training, adhere to strict supervision requirements and have each piece of advice audited by his authorising licensee before it was provided to clients.
Separately, ClearView undertook to review advice previously provided by Mr Churchill and remediated clients who had received inappropriate advice.
ASIC also noted that ClearView began a review of the personal insurance advice provided by its advisers to determine if there was a systemic issue related to the broad areas of concern identified by ASIC and engaged Deloitte to provide independent oversight.
The review found that a number of ClearView’s advisers did not undertake adequate “needs analysis” for clients.
“The needs analysis is a critical part of the financial advice process. It enables advisers to understand their clients’ financial situation, needs and objectives, and provides the basis for the financial advice,” ASIC said.
“To identify all instances of this issue and to remediate any adversely affected clients, ClearView undertook a full review and remediation program in accordance with Regulatory Guide 256: Client review and remediation conducted by advice licensees (RG 256).”
ASIC said Deloitte oversaw the review and remediation program to ensure that it was conducted in accordance with the principles set out in RG 256.
The Clearview approach was designed to create churn with advisers being very well rewarded for writing Clearview product but less so for writing other providers — basically it was a business decision by Clearview. At the same time I have seen a few of the files which have had refunds given and none of the advice was poor – with at least two of them the client were very happy but got a cheque which I told them to bank ASAP.
We have had one of these clients come to us, frankly the biggest issue isn’t that the advice is really bad, sure there is a bit of over insurance. The real issue is product and how it rates in the market place. As someone has mentioned already, the ClearView churn is the bigger problem.
Not at all surprising – the discounts ClearView were offering advisers to bring their book of business across was ludicrous and just encouraging advisers to churn their books and score huge upfront commissions. No wonder the advice wasn’t up to scratch.
when you offer shares to advisers?- surprised this is all they found. hmmmmmm
No adviser is safe from giving “bad advice”. Hindsight and litigation will always win.
You 100 page SOA will not save you in the future, it will be easily deemed inappropriate to expect someone to read let alone take in such a large document when you all know it’s the verbal interview that says it all.
Prepare for an tsunami of litigation against advisers. Basically, if you lose money or simply don’t make enough money, expect the client to get that money back.
Thank the FPA for this.
Thanks ANON , I ask what fool allowed the direct life insurance companies on tv to flog their product without SOA , needs analysis etc . thats obviously ok all care and no responsibility . When a client comes in to my office I am going to set up the TV and play get life cover now . Fill out the forms and get paid 60% upfront . NO SOa or no nothing . this is what ASIC need to explain to us today
Interesting I sat at round table of 20 people at a one path lunch of which the majority were talking about all the conferences they were going to. Overseas on churning clients from one insurer to another – one caught and an ASIC enforceable undertaking – wonder if he would have been so luckily post RC no doubt ASIC missed the rest
Of course a third party is going to identify issues.
where is this all going to stop?
Good luck everyone. When you’ve got ASIC, the big 4 banks, the big 4 law firms and AFCA all trying to squeeze the Adviser and AFSL out of every last dollar, what’s going to be left…….?
The fact that these advisers get in trouble for not completing a full fact find or proper SOA is rediculous given that companies like Real Insurance are able to sell their junk directly to the public with no concern of current circumstances or sutability of their product or the need to act in the best interests of the client.
Life insurance products need to be sold under the same sales structure no matter who is selling. Either full fianacial advice with SOA and Best Interests Duty, or a race to the bottom with General Advice for all Life Insuruance sales where the client loses and eventually the lawyers win when claims are not paid.
Insurances should only be sold under the full advice model so as to protect consumers from the prredatory actions of international insurance behemoths and the predatory actions of claims handling lawyers who charge crazy sums to submit paperwork on bahalf of unadvised clients.