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Judging by this week’s activities in the direct sales area, the FSC would have appear to have abandoned any pretence that it represents the interests of consumers. Direct sales of substandard life insurance products, without any obvious premium savings, are not in the best interests of life insurance consumers, particularly when sold by a well-coached call centre operator. That was the clear message from Hayne, but that doesn’t seem to have had any impact at the FSC, and judging by its recent in-actions, ASIC.
In response to pressure from some of its life insurance members who are suffering because of the imposition of LIF and FASEA on self-employed commissioned life risk advisers, the FSC seeks to re-engineer the debate about General Advice. Isn’t it funny how the FSC can go to the UK for support of their arguments on expanding General Advice when they ignore the recent experience in the UK that attacking life risk commissions only has one outcome – reduction in genuine new business.
Now the FSC is trying to dress up old mutton as new lamb. The General Advice system, the favourite of ASIC, is not the friend of life insurance consumers when its offered via direct sales from un-licenced operators. The General Advice regime will always be abused, because it’s human nature to find holes in the law if there is a commercial advantage. And the general advice system leaks like a colander.
The moment a caller to a life insurance call centre, or a caller responding to a marketing call from a life insurance call centre, asks, directly and independently of any “set-up” by the operator, “how much cover do you think I need” the sale has automatically tripped over into Personal Advice unless the operator refuses to answer in any form. Call centre operators, regardless of the approved ASIC script, may then often add “well other people have taken out this amount of cover”. That’s still Personal Advice. Don’t believe me, make the call!
It’s clear now from this week’s media that the FSC, unexpectedly, are attempting once again to game the General Advice system to get around Hayne
In the interest of all life insurers consumers, General Advice, and its numerous and poorly disguised derivatives, must be abandoned by ASIC. Or, alternatively, ASIC, for once in their lives, should take a commercial position on the sale of life insurance products and drastically reduce the compliance burden on Authorised Representatives who market insurance products on a Personal Advice basis.
Revisiting LIF and taking note of what happened in the UK and NZ might be a good start, but I won’t hold my breath