The Australian Securities and Investments Commission (ASIC) has further defined the degree of so-called “churn” in the life/risk sector acknowledging it could involve as few as 50 advisers.
ASIC deputy chair, Peter Kell said to a public hearing of the Parliamentary Joint Committee on Corporations and Financial Services that the regulator’s collection of data from insurers about lapse rates in policies had allowed it to build a picture with respect to churn.
“… ASIC now collects data from the life insurers about lapse rates in policies, which can be an indicator of inappropriate switching and churn,” he said. “It’s still fairly early days, but what it has allowed us to do already is to identify a population of advisers that are potentially at risk of being in that category.”
“I think it was around 500 to start with. But, after applying a range of filters, it’s allowed us to work that down to a much, much smaller number, and you can have a much more targeted and focused look at a much smaller number of advisers rather than a more scattergun type of approach,” Kell said.
He said that process was now in train and that ASIC was doing follow-up work on a much smaller number.
“It’s less than 10 per cent of the initial pool of advisers where there may be a much greater risk,” Kell said.
