The Association of Financial Advisers (AFA) has called for greater clarity from the Australian Securities and Investments Commission (ASIC) around the quality of life/risk advice, with any new review entailing a properly-targeted survey of life insurance advice.
AFA chief executive, Phil Kewin has today issued a statement to members expressing concern at seemingly contradictory evidence given by ASIC officials to Parliamentary committees and seeking greater clarity around issues such as “churn” and the reasoning behind the Life Insurance Framework (LIF).
“We are seeking for this new survey to include a random sample of life insurance advice, in addition to any targeted sample, so that we can be more confident in terms of the real message about the quality of life insurance advice,” he said.
“We are also seeking improved analysis on the causes of poor advice,” Kewin said.
He said that while the AFA acknowledged there would always be ongoing surveillance, the “review” and measure of success of LIF should not be looking at advice until after the LIF is fully implemented on 1 January 2020, so that the impact of these reforms and other improvements had had their full effect.
“The correct assessment is vitally important to both consumer trust as well as previous suggestions that LIF is just a transition phase to level commissions,” Kewin said.
Kewin’s statement said the AFA was also calling for a range of other measures to be implemented in order to ensure that we are better positioned for a successful result in 2021. These measures include:
- All elements of the financial services industry to call out and confront poor conduct by financial advisers.
- Life insurers to publicly disclose the number of advisers who they refuse to do business with or have placed on level commission only terms and reporting the details to ASIC and licensees. It is a commonly held view that the life insurers know who is churning, so let’s make sure they make this information available.
- Greater support for advisers to meet their product replacement obligations.
- Better enabling and more efficient production of advice on upgrading or modification to an existing policy, so that product replacement may not be required.
- Enhanced reference checking procedures to reduce the risk of advisers doing the wrong thing, quickly moving to another licensee.
- Public reporting of claims payment outcomes and lapse rates across the retail, group and direct channels.
