FSC supports ASIC’s life insurance sales review
The Financial Services Council (FSC) has commended the Australian Securities and Investments Commission’s (ASIC’s) review on the sale of direct life insurance, with the report finding that the FSC Life Insurance Code of Practice had lifted the bar in direct insurance.
In the report, ASIC analysed consumer sales calls both before and after the Code of Practice was introduced, finding that it had improved conduct.
“For many firms, conduct had improved, and the introduction of the Code by the FSC appears to have played a role in improving sales standards, particularly where it sets clear and specific expectations,” the report said.
The FSC was disappointed, however, that the report uncovered some continuing practices among some life insurers and distributors that meant “too many” consumers were buying products that they later cancelled or without properly understanding the cover they had taken out.
A second iteration of the Code that the FSC was currently working on with ASIC, consumer groups and other industry stakeholders aimed to further enhance the Code’s consumer protections.
In the meantime, the report highlighted the following benefits of the code to assist consumers:
- Pressure selling was explicitly banned by the FSC Life Insurance Code of Practice;
- Life insurance companies were required to provide sales staff with a set of rules and adequate training to prevent unacceptable sales practices; and
- The Code also required life insurers to ensure consumers are given all the information they need to make an informed choice about the insurance they buy.
Recommended for you
Policy and advocacy specialist Benjamin Marshan has left the Council of Australian Life Insurers after less than a year, having joined in March from the Financial Planning Association of Australia.
The declining volume of risk advisers meant KPMG has found a rising lapse rate for insurance policies arranged by independent financial advisers, particularly in the TPD and death cover space.
The Life Insurance Code of Practice has transferred from the Financial Services Council to the Council of Australian Life Insurers.
The firm has announced it will no longer be writing new life insurance policies in the retail advised and corporate group insurance channels, citing a declining market and risk adviser numbers.
