No 'alarms' sounding in risk sector, says FPA
The number of FOS determinations concerning life insurance advice in the past year has been low, and is not indicative of significant problems across the industry, says the FPA's Dante De Gori.
Speaking at the FPA Professionals Congress in Brisbane last week, Mr De Gori – who was recently announced as Mark Rantall's successor as chief executive – said he and his team had sifted through FOS data recently to ascertain the current quality of life insurance advice.
"We all saw the ASIC report that was released, but what is happening? Are consumers complaining about the advice we're providing?" he said.
Of the 17 FOS determinations since January 2014, only two were decided in favour of the consumer. Another two determinations were neutral while the rest were in favour of the adviser.
"That, in my view, doesn't send alarm bells," Mr De Gori said, "but of course, some may argue that consumers aren't aware or understand whether the advice is any good because there hasn't been any detrimental effect in respect to any loss at the time."
Mr De Gori examined some of the top reasons why advisers were being questioned, including a lack of policy comparisons and the cost of insurance products.
"We talk a lot about comparing superannuation funds when we're doing super switching, which is very important, but we don't talk a lot about comparing insurance products," he said.
"We might do a cost comparison of one or two years, but what's the cost comparison over a more sustainable time?"
Those learnings form part of the FPA's new Life Insurance Advice Guide, which was launched to FPA members in October.
The guide offers several principles for how to use the FPA Code of Professional Practice with risk advice, including tips on recommending products and on continuing to deliver service after the insurance advice is implemented.
Mr De Gori said the guide was created to help train advisers and improve competency, which are not addressed in some of the proposed reforms in the Life Insurance Framework.
"Changing the commission model, in my view, doesn't make the adviser more competent than they were before the commission model was changed," he said.
"It doesn't improve the training standard and it doesn't deliver on the final objective, which of course is giving quality advice to Australians.
"So the FPA [then decided to develop] a life insurance advice guide. It's not a rule, it's not a standard – it's a guide."
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