Speaking to the Parliamentary Joint Committee on Corporations and Financial Services earlier this month, ASIC deputy chairman Peter Kell said that the issues uncovered in its 2014 life insurance advice review continue to exist today.
“On life insurance and advice remuneration, we’ve seen recent significant law reform through the parliament on this issue, and those reforms start to take effect from 2018,” Mr Kell said. “This will affect how insurers pay for the distribution of life insurance, both by financial advice and through the direct channel, with an aim of reducing some of the conflicts of interest and problematic practices.
“We have several projects on foot in relation to the advised channel for life insurance. Our 2014 review found that there were significant problems in this area.
“Unfortunately, in our surveillances, we are still regularly seeing poor-quality life insurance advice and inappropriate advice to switch life insurance.”
Mr Kell said that ASIC is currently reviewing life insurance advice in the lead up to the reduction of allowable commissions. It is focusing, he said, on advisers who have large numbers of policy lapses among their clients.
“This review has identified that there are potentially significant numbers of advisers who may be providing life insurance advice to clients [that] is not in their best interests,” the deputy chairman said. “Similarly, in our other current surveillance work, where we look more broadly at advice, we are still seeing high levels of poor life insurance at times.”
ASIC is still considering whether to take action against some of the advisers and their licensees identified in these reviews, Mr Kell added.
“We’re still to make a decision. That is a project that is partway through,” he said.
“But I want to be clear on this point: The fact that that is our initial focus doesn’t mean that there are no problems elsewhere, that every other adviser identified through this exercise is problem-free or that there aren’t ongoing problems.
“We want to work with the industry to crack down on the advisers who are not doing the right thing by their clients. I would argue that this makes our work in this area critical, and that compliance with remuneration reforms as they come into play is going to be a key priority.”
Meanwhile, another insurer is sold to an overseas company. ASIC and the government are not paying attention to the greater problem we are facing in Australia, the massive loses the re insurers are having. Income protection and Trauma insurance are not profitable. Insurers have been conducting an unsustainable arms race with product definitions and extra benefits. The FSC (lobby group for banks and large insurers) did their job very well and convinced the Government that “churning” and adviser remuneration was the only issue. The clients will be the big losers out of all the selling off of our insurance companies and the arms race. We will start seeing this impact the Australian market in 2 years’ time with more premium increases and reduction in quality and affordable income protection policies. But hey, the lobby group did what they needed to do to benefit their members and the minister in charge will probably move on to any portfolio by then. If Insurance companies were providing electricity I’m sure there would be a lot more concern about this for the end consumer.
I would LOVE to see an AUDIT performed on ASIC by a higher power. I have no doubt WHATSOEVER they would FAIL abjectly. They are NOT ‘Fit For Purpose’ in any way shape or form. Their last few years, especially, should be a cause for them to hang their collective heads in SHAME and apologise profusely for taking taxpayer funds as pay when they have done ONLY things that hurt consumers and advisers. They have and continue changing our industry adversely with the complete opposite outcomes of ‘Client best interests’. How can they be so OBLIVIOUS as not to see this?! They should immediately have their wages CUT by 50% min AND most of them redeployed to other tax payer funded areas of govt that don’t require highly skilled employees. I am way beyond fed up with their meddling and destruction of our once great industry and seasoned advisers that want nothing more than to ably service and protect their clients.
What qualifications does ASIC have as a group or individuals basis upon which to judge others who are in the industry? Have ASIC completed the educational requirements in order to judge others. If they find advisers they believe are not providing correct advice, then why not do something constructive rather than hiding in the bushes with a big stick waiting to pounce.
Seriously ASIC, nothing but a group of bullies and mobsters. I guess you have to justify your salaries somehow and by telling those who have no idea, what you think, makes it right. Either do something to prove your position or get a real job.
“But I want to be clear on this point: The fact that that is our initial focus doesn’t mean that there are no problems elsewhere, that every other adviser identified through this exercise is problem-free or that there aren’t ongoing problems.”
In other words even if we don’t find a problem there needs to be a problem because we wrote a flawed paper on it and found there was a problem. Right up there with the old smoking researchers that didn’t find a problem.
Q. I imagine that the number of ASIC staff (including their families) that own fully underwritten retail life insurance policies with an adviser would be very low. What is that saying about walking in another persons moccasins?
This excerpt from the article… “Unfortunately, in our surveillances, we are still regularly seeing poor-quality life insurance advice and inappropriate advice to switch life insurance.”…
As Anonymous says…why can’t they be more specific with their statements? For all we know they are finding issues based on the investigative team’s limited knowledge of our industry. After all, you don’t know what you don’t know. Enough’s surely got to be enough as ASIC seems to be in contradictive mode now.
Glad to see ASIC on the job and protecting consumers from…..um, er,… something or other? Ready. Shoot. Aim!
and I am seeing a high level of incompetence from ASIC. Until this mob stop defining a lapse as “churn” there is no hope. I believe they recently stated “churn” was no where what they said initially? Maybe their incomes should be clawed back due to getting it so wrong?
Really, how ignorant/stupid/biased is ASIC???? Education, not restricting what you get paid will lead to better advice. If you don’t know what you are doing, wether you get paid $10 or $1000, it isn’t going to make any difference to the quality of advice.
By the way, how about saying where its poor so it can be rectified rather than posing and making general statements. Or cant you do that any more because your whipping boy of churn has already been exposed as a lie.