Inappropriate risk advice ‘prevalent’, Kell tells RC
ASIC deputy chair Peter Kell has told the royal commission that inappropriate life insurance advice is one of the most common types of inappropriate advice in the industry.
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.
For updates on the royal commission, stay tuned to ifa’s live blog here: https://www.ifa.com.au/strategy/25404-royal-commission-financial-advice-hearings-live-blog
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