Insurers to blame for risk wrongdoing
Insurance product manufacturers, not advisers, are responsible for “duplicitous behaviour” in the risk advice space, the AIOFP has argued in a communication to ASIC’s leadership.
In an email to ASIC chairman Greg Medcraft and deputy chair Peter Kell – in which finance minister Mathias Cormann and Nationals senator John Williams were CC’d – AIOFP executive director Peter Johnston wrote that advisers have once again been caught up in a case of blaming the middle man.
“We all know ASIC have a difficult and largely thankless job trying to police the industry but we are concerned over ASIC’s continual sole focus on the advisers in both product failure and risk commission payments,” read the email, seen by ifa.
“Advisers do not manufacture the products and cannot be held responsible for them failing.”
On the contentious issues of risk commissions and ‘churning’ insurance policies, Mr Johnston again argued manufacturers need to take a fairer share of responsibility.
“Manufacturers are using the high level commission payments as ‘bait’ to try and attract advisers away from supporting competitors, this has been going on for over 70 years,” the email stated.
“Manufacturers who coerce the adviser across to support their products with bait/incentives call it ‘a successful marketing strategy’ and those who lose the client premium call it ‘churning’, but all continually participate in this duplicitous behaviour at different points depending on their market share.”
Mr Johnston also called on the regulators to meet with client-facing risk advisers and not with organisations or industry bodies that have a “sympathetic bias towards the manufacturers”.
This story comes as Asteron Life expels more than 100 advisers from its distribution ranks for churning away from the Suncorp-owned insurer.
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