ASIC urged to include super funds in life insurance probe
The corporate regulator has been encouraged by federal Liberal MP Bert van Manen to look into the role of superannuation funds as part of its industry-wide review of the life insurance sector, which will be launched in response to the CommInsure scandal.
During a hearing of the parliamentary joint committee on corporations and financial services on Wednesday, ASIC deputy Peter Kell said it was "his understanding" that none of the alleged victims in the scandal had received advice from a financial adviser.
ifa reported yesterday that ASIC will investigate the claims against CommInsure in addition to conducting a wider probe into claims handling across the life insurance sector to determine whether similar problems exist elsewhere.
Mr van Manen – a former adviser – urged ASIC to take the opportunity to scrutinise super funds' disclosure requirements and how these may impact members at claims time.
"I would suggest that it would be a critically important aspect to have a look at because a lot of people unfortunately don't pay a lot of attention to what's happening in their superannuation funds," Mr van Manen said.
"Will the report that you produce have some sound and solid recommendations that apply not only to the life insurance industry but to the superannuation funds that are getting paid handsome commissions for these group life policies that are very often not disclosed to their members?
"Is there a requirement for super funds to disclose the level of commission they receive from the insurance company? Why is that not the case when everybody else has to disclose what their remuneration is?"
Responding to Mr van Manen, Mr Kell said that this was "a good question to ask".
"I think that's certainly something we will take on board. We haven't thought through all of the details yet but in terms of our review of the wider industry, and looking at particular channels, that is certainly something that we can think about."
Mr Kell also explained that the issues raised by the CommInsure scandal were separate to the ones being addressed by the Life Insurance Framework.
"The reforms that are currently before the parliament relate to a different aspect of the life insurance sector," he said.
"Our report [on risk advice commissions] highlighted problems that we found around advice on life insurance [...] The issue there was not so much about claims handling."
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