One of Australia’s largest dealer groups has called for risk advisers to be exempt from the best interests duty in order to ensure advice around life insurance remains affordable and accessible to the average consumer.
Synchron director Don Trapnell said the requirement for life insurance advice to take account of a client’s entire financial circumstances and goals meant that clients looking for simple advice on which policy was right for them were likely to be priced out of taking up a retail life policy.
“Clients are likely being over-serviced and consequently overcharged because of legislation brought in by a government that appears to believe Australians are too stupid to know what they want, need and can afford in terms of life insurance advice,” Mr Trapnell said.
“Australians are not stupid and should be free to choose.”
Mr Trapnell argued that current licensing obligations around risk advice were “the very definition of a nanny state”, and that in the process of seeking to provide advice in the client’s best interest, risk advisers were being forced to charge for full advice that the client did not need.
“Ironically, the advice may therefore not be in the client’s best interests at all,” he said.
“A much better approach would be a requirement for life insurance advisers to provide appropriate advice – that is, advice that is in line with the advice the client is actually seeking, and actually needs.”
Mr Trapnell said a lack of regulatory relief for risk advisers was expected to push more consumers into inferior direct insurance products.
“This is likely to ultimately see fewer people appropriately insured and the social security burden on the government further increase,” he said.
“And as I have said before, that is not in anyone’s best interests.”
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