Advisers are feeling wrongfully targeted by Industry Super Australia (ISA) and say the recent scandal regarding CommInsure's mishandling of claims has nothing to do with advice but rather with industry super funds.
In a statement yesterday, ISA reiterated calls to ban commissions on life insurance and pointed to Fairfax Media's reporting on CommInsure misconduct as further proof that the industry needs reform.
The story generated concerns from commenters on the ifa website, who said ISA chief executive David Whiteley had incorrectly linked the two matters.
"Not one case in the story mentioned that the client had received advice from an adviser. The ISA has some nerve bringing up the commission debate on the back of a story that highlighted issues their own funds have when it comes to protecting everyday Australians," one commenter stated.
Another noted it was "Interesting that the Fairfax Media report predominantly showed the flaws of group insurance (including industry super funds) and institutional failure."
Speaking to ifa, Mr Whiteley explained that the CommInsure scandal relates to life insurance commissions because ASIC's report on the industry had linked commissions with poor outcomes, including the denial of claims.
"Firstly, ASIC pointed to evidence that advisers failed to adequately consider their clients' personal circumstance and needs, leading to situations where consumers received inferior policy terms, paid more for cover, had health issues excluded and, in some cases, had claims denied where they previously had cover," he said.
"Secondly, ASIC drew a number of connections between the structure and payment of commissions and poor commercial outcomes for insurers that had 'real commercial effects'. They observed a key structural challenge for the industry included 'downstream issues affecting profitability', such as increasing costs and increasing lapse rates."
Also speaking to ifa, Senator John Williams said the concerns lie with industry super funds, and that Australians should pay more attention to where their money is going.
"The big concern here is that millions of Australians would have life insurance they are not even aware of with their superannuation. And here is the question I ask: 'Should this life insurance in your super be an opt-in, not an opt-out'?" he said.
"My strong advice to each and every Australian that has superannuation – especially with an industry super fund – would be go and look at your policy, look at your superannuation and look at what they are taking out and what sort of policy you have got.
"If people are taking your money every month, [you need to ask] why are they taking your money and what is in it for you?"
Staffing levels at the prudential regulator will rise and consumer advocates will be given more cash under new measures outlined in Tuesday’s budget...
The commercial law firm has signed on to partner with Australia’s leading technology and innovation event for financial advisers. ...
Insurers and industry bodies are urging life insurance clients to get a COVID vaccine as soon as possible, amid social media speculation that getting ...