MLC Life said it welcomes the government’s commitment to implement the majority of the Quality of Advice Review’s (QAR) recommendations but also wants to be able to provide personal advice.
“We’re pleased to see the Albanese government delivering better financial outcomes for Australians, with clear reform to make financial advice more accessible and the intention to allow members of superannuation funds to access advice on an affordable basis through their fund,” said Kent Griffin, chief executive of MLC Life Insurance.
“But more can be done to look after those that need access to affordable, simple advice.
“Australia’s superannuation system is world-class, in providing consistent wealth creation to working Australians while providing them a default base cover of insurance, and the government’s announcement to allow super funds to provide advice to their members is a terrific step in the right direction.
“The same notion that would see super funds provide customer service so their members have access to personalised information to make the right choice for their circumstances, is also true for Australia’s life insurers.”
Speaking on an ifa webcast, Financial Advice Association Australia (FAAA) CEO Sarah Abood said Financial Services Minister Stephen Jones is allowing superannuation funds to expand their role in financial advice as a “trial run” to essentially test the waters.
“When we listen to the minister, when we hear the way those recommendations are being promoted and talked about, it’s very much that this [is] allowing people who are not financial advisers to give advice to people that that would be a big change and I think in the minister’s head, he is thinking let’s do a trial run with the super funds,” Ms Abood said.
“Let’s see how it works in super funds and if we iron any kinks out of it, we can, with more confidence, extend it more broadly.”
More recently, she said talk has shifted to whether life insurers “might be the next cab off the rank”.
“In both cases, it’s because there is an existing duty at law to preference the interests of clients or members,” Ms Abood said.
“For insurers, it’s the duty of upmost good faith, for trustees, it’s prioritise the interests of members.”
MLC Life said that millions of Australians are unable to speak to their insurers about their personal circumstances to ensure they have the right coverage.
Michael Rogers, chief individual insurance officer for MLC Life Insurance, said: “Australians are asking pretty basic questions, all ultimately seeking appropriate coverage that’s affordable and accessible, and it is virtually impossible to help if we can’t provide simple advice to our customers that suits their personal circumstances.
“Every day, customers contact us for help as they seek to ensure they have the most appropriate cover at an affordable price. In instances where the customer no longer has an adviser, the current advice rules mean we’re simply not allowed to assist them,” Mr Rogers said.
“This isn’t about making sure more people have more insurance, we want to make sure our customers have insurance that’s affordable, accessible and appropriate.
“From a consumer protection perspective, most people believe they are seeking basic customer service and the Quality of Advice Review clearly identified that the current situation doesn’t provide enough choice for Australian consumers who are seeking simple insurance advice that isn’t comprehensive.”
In most cases, Mr Rogers said, customers are looking for guidance about their coverage in the face of changing life circumstances, such as the birth of a child, purchase of a home, or a change in their employment.
“For many Australians a financial adviser is an important investment, but for some they are simply looking to check their coverage or review their policy,” said Mr Rogers.
Mr Griffin added: “Like super funds, insurers are governed by an obligation to act in the interests of our customers, including section 13 of the Insurance Contracts Act of 1984, which imposes a statutory duty of utmost good faith on life insurers, and has been interpreted by the courts as requiring the insurer to look to the interests of the policy holder.”
He pointed out that the provision allows for damages as well as imposing penalties for breaches.
“These obligations are in addition to the many consumer protection and conduct obligations by which life insurers are currently restricted to operate only in the interests of customers and potential customers,” said Mr Griffin.
He added that this includes the “requirement to operate efficiently, honestly and fairly, anti-hawking requirements, product design and distribution obligations, prohibition on misleading and deceptive conduct, and the imminent Financial Accountability Regime”.
Mr Rogers added that it is “clearly in the customer’s best interest” to allow insurers to help them understand the “appropriateness and affordability of their cover”, while some “guardrails will help ensure consumers are protected”.
MLC Life Insurance has also called for legislating consumer protections including education standards, quality assurance and oversight, clear limits to the scope of simple advice, as well as the expansion of the Life Insurance Code of Practice.
“These protections are all about making sure consumers are given the advice that’s appropriate to their needs, so we can offer affordable and appropriate insurance to everyone, not just those that can afford financial advice,” concluded Mr Rogers.
FAAA… nothing to say?
As an MLC policy owner I was sent a MLC survey link. I thought it was to “rate” my call with the service person.
NO !! This survey was all about their new service offering. I took 42 sceen shots as I couldn’t believe what I was seeing. It was misleading where it showed an ~$2,000 fee for service via “your” licensed financial adviser, No fee if directly with MLC, or “Low Fee” “NEW! Limited Personal Advice”
Near the end the survey asks, “would you expect that your [b]existing advisor would need to be notified [/b]of this?”
Well, I think MLC just bit off the hand that feeds it!
MLC courted the press for a headline and it appears they’ve been caught out…. The definition of disingenuous. I think the audience has all the information they need to determine if they are the right partner for them.
The top end of town (the life insurers) insisted that the LIF review was a good idea.
Probably because advisers are pesky and ensure substandard offerings from the likes of “real Insurance” and or product manufacturers with a poor history (bank connected insurers) didn’t get any attention or support from advisers. Now the adviser’s input to the process has diminished quite substantially – there is no surprise then that the sales have fallen away – the reforms they (the LIF review heroes) championed are now coming back to bite them. No one saw that happening. Loyalty is a two-way street. and from a commercial perspective loyalty is coin operated.
So, life insurers are not happy with: halving commissions, doubling adviser responsibility, hiking up level premiums, now, they want to advise our clients via a back-door?
Get your own house in order MLC before grabbing for market share would be my suggestion.
At this point, it would be better for MLC to improve their administration.
There’s nothing stopping MLC having a small specialist team of employed advisers provide this service if required. They can provide this service now if they want too. I wonder why they don’t?
Oh wait…I’ve seen this movie before, it’s Back to the Future
Gobsmacked! Cash train will be huge for politicians!
Will insurers also carry the same liability as advisors for any error or omissions in the advice and be open to litigation by insureds for the advice they provide?
Jones is sending the sheep to the Wolves. MLC for example says that a service fee paid for administrative support is not a business expense. MLC says fixed costs are not necessarily ongoing costs or claimable against business expense insurance. MLC says a lawyer on IP claim who visits the practice they own (even if it is only ten hours or less a week) constitutes generating an income and the income (even if a distribution) should be offset against the claim. MLC says that any profit the business makes is offset against an IP claim even if the insured is not working. AMP says replacement terms do not extend to a suicide clause. The insured owns a policy with Asteron and the adviser switched to AXA/AMP after 15 years with Asteron. Resolution Lifes the CEO declines the claim saying it falls within the 13-month clause. It has been the case for many years that replacement terms if the 13-month clause has been served it will be waived. One insurer asks if a SPECIALIST MEDICO can read the paper to avoid a benefit payment (own occupation agreed value endorsed0. Zurich asks for a financial planner on a claim to provide a copy of time sheets to prove they are not working. Zurich says full financial evidence with a generated income from financial planning business is generated income. Super funds Insurer accept Terminal Illness claim before settlement the insured dies and the super fund declines to pay the benefit as Terminal Illness. MLC refuses to upgrade policyholders to the new products without full UW. Superfund does deal on the steps of courts to avoid ASIC AFCA and member lash back. Superfund was the owner of a financial planning arm and had shares in the insurance underwriter.Kick backs increased members premiums by 85%.
So let’s get this right. under the reform the Insurance companies are so called bleeding funds, reduced commission payout to advisers, never reduced premiums, now they are happy to provide advice direct, dont pay commissions, and the advisor needs to go through hoops to provide holistic advice and below cost as clients dont want to pay… mmm the screws just keep turning and getting deeper into advisors.
MLC brains trust must wonder why advisers don’t want to give them business..
And drug companies should be able to provide
advice and give prescriptions
It appears everyone other than suitably qualified financial advisors should be able to provide personal financial advice.
What was the point of the Royal Commission and the destruction wrought on the advisor community?
Was it merely an exercise to rid the world of small independent advisors and firmly entrench advice within the camp of the industry fund?
Only a fool would deny this.
in fairness – it was a typical leftie ploy – go for the shock and horror headlines (create a problem) then turn up with a solution to a problem that hitherto didn’t exist. From this force lots of additional obligations for professionalism on the opposition – Get your own review monkey to say it’s all too costly (that is our first set of reforms) and carve out your bosom buddies and exclude the alternative team from the market. Pretty simple strategy really. Pretty much as the former minister for FOFA – said to a group of advisers in 2012. Every time we have reform – the play is the same – and the corporates sit there sucking their thumbs
Here we go.
Full circle, back to the ’80s, then?