Synchron director Don Trapnell says he is very concerned that the Australian Securities and Investments Commission (ASIC) has identified that churning is a problem in the industry given that there are a lack of data on the issue.
“We are obviously very concerned that ASIC believes churning is a problem and also a little bit baffled,” Trapnell said.
“One of the reasons Synchron was so opposed to the introduction of a Financial Services Council (FSC) churning policy was that we believed there was no evidence to support that a culture of systemic churning exists amongst advisers.”
Trapnell said that in an industry driven by statistics, compiling evidence of churning should be a relatively simple task and yet, to his knowledge, no life company has yet run the numbers.
“There is a question on every life insurance application that asks, 'Does this application replace an existing policy? If so, how long has that policy been in place?' It would be easy to conduct analysis of this question and present this as evidence to decide whether or not we actually have a problem, but to date, to the best of our knowledge, no-one is tracking this question.”
Trapnell said that despite Synchron consistently calling for the statistical evidence, the FSC and the life insurance industry did not provide it.
“If the FSC or the industry has since provided the evidence to ASIC, advisers need to see it,” he said.
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