Major dealer groups have been served with Australian Securities and Investments Commission (ASIC) Section 33 notices in what is understood to be the opening stages of the regulator’s review of the Life Insurance Framework (LIF).
Dealer group heads have confirmed receipt of the Section 33 notices which require them to provide relevant documentation to ASIC around life insurance advice and Money Management understands that the request is specifically targeting advice given in 2017, just ahead of the implementation of the LIF regime.
It is believed that ASIC will use the information collected in relation to 2017 for use as a benchmark against which to measure its assessment of the industry in 2021 – the Government-announced review period for the success of the LIF.
The issuing of the Section 33 notices is consistent with ASIC having earlier this year announced that it was delaying a number of measures because of the impacts of the COVID-19 pandemic but that it would begin the first round review of life insurance files in the second half of this year.
Importantly, any ASIC review of life insurance files from 2017 is likely to reflect a period during which life advisers were vitally aware of the Government’s moves and intentions with respect to the implementation of the LIF and, in particular, the issue of policy churn.
What is more, a significant number of the life/risk advisers who were operating in the industry in 2017 are known to either have exited the industry or are in the process of doing so.
Association of Financial Advisers general manager policy and professionalism, Phil Anderson, said that his organisation was aware of the ASIC review and the issuing of Section 33 notices.
“This is the start of the review the Government requested be undertaken by ASIC when the legislation was being passed,” he said.
However, he noted that in the intervening period, not only a significant number of advisers had exited the industry but also a number of insurance entities and that a complicating factor was that, more recently, the COVID-19 pandemic had impacted advice around life/risk as some clients struggled to meet their existing premiums.
ASIC signalled both during and after the Royal Commission that any adverse findings resulting from its 2021 review of the LIF might result in it recommending to Government adoption of a level commissions structure.
