When questioned by counsel assisting the commission Rowena Orr as to which types of advice “ASIC [regards] as most prevalent currently”, Mr Kell said areas in which consumers are “switched out of their current product into a new product” without reasonable basis to do so was a common challenge.
“That often involves superannuation: as we’ve just mentioned, advice to establish a[n] SMSF particularly where a client has, for example, a lower balance, or may not understand the obligations that attach to being a[n] SMSF trustee,” he said.
“We’ve also seen regular advice around life insurance where the switching to the new insurance would substantially erode the superannuation balance if it’s paid for out of super, or may result in pre-existing conditions creating problems for the customer.”
Additionally, Mr Kell said the use of a “one size fits all type of model” was a common form of inappropriate advice.
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how do we hold Mr Kell to account? If we cannot, who can? I would have thought the FPA/AFA would be all over him after such statements. Especially after the falsity leading up to the LIF debacle.
Is it in the clients best interest to have the correct level and type of insurance cover in place when an event gives rise to a claim despite the premium cost of the insurance if the client has made an informed and calculated decision in respect to the cost and the potential financial security value proposition the placement of the insurance offers ??
It seems that over time ASIC are making a determination as to the appropriateness of insurance cover and the corresponding premium cost based on the insurance cover not paying the benefit in respect to a claim.
If the insurance cover provides the level of cover at claim time to pay off debt, pay for children’s school fees and costs, save a business, allow a surviving partner to live in dignity with financial security or provide continued income to a family when a significant breadwinner is unable to work…..does Mr Kell then believe the insurance cover is too much, too expensive and the adviser has simply over sold the client ??
No one ever dies, becomes disabled or loses their ability to work at the right time Mr Kell.
If a 35 yr old decides to spend 30%, 40% or even 50% of their super contribution in order to provide the level and type of insurance cover required to adequately protect themselves, their family or business appropriately, is this bad advice ?
The thing with insurance cover Mr Kell that it is a bet.
A bet that you either will need the insurance or you won’t.
When an event occurs it is better to have the correct level and type of insurance cover in place, is it not ?
It is very easy to state that the cost is too high, the level of cover too much and the depletion of superannuation is not appropriate when a claim has not occurred.
Kell smells. Bias or ineptitude? The ASIC figures from ‘churn’ were incorrect and purposely misrepresented by the unholy trinity, ASIC, the FSA and the ISA. This RC is meant to be examining ASIC as closely as any other miscreant, and yet to date it appears they have not except some initial minor blustering. ASIC and particularly Kell should be taken to task over all allegations and required to completely verify his information and statements, not just proffer opinion based on biased investigations as if it is fact. Kell smells or maybe it is just the BS gushing from his mouth.
There are 2 major problems with Mr Kells statement. First, as other commentators have noted – there is ample evidence that ASIC does not take into account the appropriateness of the advice for a client at the time of advice (refer to their inability to statistically quantify percentage of ‘churn’ that is warranted or unwarranted), so we could be forgiven for assuming that ASIC cannot quantify the warranted use of super assets or not. Secondly, ‘prevalent’ is interpreted as widespread, prevailing, common, universal, pervasive, extensive, ubiquitous and so on. What a damning inference against the whole adviser population. I hope that, unlike other enquiries, the members of the RC are smart enough to ask ASIC for their comprehensive evidence for such inflammatory statements!
Mr Kell has been quoted, however like all good news stories, someone’s comments taken in isolation can distort the context in which the comments where made. I feel this situation is what has been happening for 10 years and has landed the industry in this precarious position. Unfortunately the government can’t have it both ways…they either want the average punter to obtain advice and purchase cover to fund their financial needs for when things go horribly wrong and so the Federal Budget doesn’t have to…or they don’t. The fact is that people want the cover and if they can legitimately utilise their Super Account Balance, then this is seen as a very attractive outcome for the short to medium term. Yes it erodes their balance but if people don’t understand this, then there is a very good chance they don’t have an above average income anyway.
Broad brush statements made by people who do not understand who or what they are talking about.
Why are we surprised??
Mr Kell makes no reference to people who have $100k of risk inside an industry fund when they need more extensive and higher value cover so they go to the only place where they have the spare cash to fund premiums, their super fund. The principal reason for switching I have seen is the situation outlined and the consumer can’t otherwise afford the extra $50/week in premium cost to have the actual risk cover they responsibly require. Kell used to make some sense, did someone identify swap him with Greg Medcraft?
Curious to know how many mums and dads Mr Kell has sat infront of to advise on risk insurance, to make such a big statement?
Mr Kell is drawing a very long bow there, I honestly don’t know where he gets his figures from. He is just blasting the industry based on a few peolpe who do the wrong thing.