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.
APLs have no status at law and are not mentioned in the Corporations Act.
If an adviser fails to recommend the best insurance policy to their client they have breached the Corporations Act’s best interests duty and, probably, breached the duty to prioritize the client’s interests.
It’s no defence to say “but it was not on my AFSL’s APL”. That APL is just something made up by your AFSL and has no status at law. You will still be liable for your client’s damages. In fact saying “but it was not on my AFSL’s APL” just makes things worse, elevating the problem to the level of systemic negligence and systemic Corporations Act breaches by your AFSL.
If an AFSL does not allow its advisers to recommend the insurance policy most appropriate to the client and therefore in the client’s best interests it is forcing its advisers to breach the Corporations Act.
What a joke. If the FSC were not the dodgy cartel they are then they would be advocating open APL’s
Well a huge congratulations to the FSC – managed to ram through the very profitable Trowbridge recommendations in only six months and raise premiums by over 25% but some 14 months later have provided this waste of time recommendation as well as still not agreeing to a reasonable code of conduct.
Our professional bodies will be letting us down if they do not respond appropriately to this nonsense and lobby for some actual change rather than lip service
My licencee has a policy that if you need to write a product not on the APL you put a case forward and it’s allowed. Sure all non-aligned licences are the same, only the banks are restricted
Not everyone is doing this already?! This seems like a pretty low bar.
how will this change anything? surely the only way forward to have all APRA regulated insurers on every APL….