The AFA believes there should be further scrutiny of the FSC’s Life Insurance Code of Practice in its submission to the life insurance inquiry, saying that it needs to include commitments to the advice profession as well as to consumers.
In its submission to the inquiry to be conducted by the parliamentary joint committee on corporations and financial services, the AFA noted its concern “that the industry will not adequately self-regulate their distribution practices towards advisers”.
“The code needs to include commitments to consumers and the financial advice profession as 50 per cent of Australia’s $15 billion in life insurance is arranged through the expert advice and support of financial advisers,” the AFA said in its submission.
“We are concerned that a CEO of one large insurer was recently quoted as saying that the FSC’s code is not the place for outlining obligations between life insurers and advisers.”
The AFA said it would recommend the parliamentary committee consider the code become a statutory one with parliamentary oversight “if the FSC does not address the deficiencies we have identified in the code by its first review of the code … and insurers do not improve consumer confidence in their services”.
“It may be appropriate to have ASIC consider this in their review in 2021,” the submission said.
The AFA also noted other aspects of the life insurance reforms that appear to have not been implemented: the improvements to approved product lists, policy cancellation scrutiny and improved Statements of Advice (SoAs).
“The latter two measures appear to be affected by insufficient funding allocated to ASIC, while little has been announced from the industry about following through with widening approved product lists,” the submission said.
“It seems that all three areas would benefit from some direction from Parliament to move them closer towards their intended result.”
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