The FSC has drafted and released for consultation its standard for life insurance approved product lists as a means of promoting competitive access and choice for advisers.
According to the draft standard, which will be compulsory for all FSC members once approved, there will be a requirement for life insurance APLs to contain a choice of multiple life insurance providers and to be supported by robust off-APL processes, the FSC said in a statement.
This will enable advisers to recommend alternative products or insurance providers that are not on the APL to help meet best interest obligations.
“To ensure consumers have full transparency to make an informed choice, disclosure of how many products and providers are on the life insurance APL will also be included in the advice process, namely in the statement of advice (SOA),” the FSC said.
“Additionally, there is a requirement for APLs to have a reasonable basis and to be formulated with the best interest duty in mind.”
The draft standard also sets out best practice principles, which are not mandatory but are intended to assist with creating and maintaining a life insurance APL, including:
- Having an investment and product committee of experienced research professionals to assist with a licensee’s internal research process;
- Encouraging licensees to develop and utilise benchmark methodology in identifying which products are suitable for inclusion on the APL; and
- Having a range of factors to consider when reviewing the suitability of an insurance product/provider for inclusion on the APL.
The FSC said the draft standard will be reviewed within 18 months of commencement.
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