The Australian Securities and Investments Commission (ASIC) needs to be careful to ensure that financial advisers are not inadvertently caught up in the new, tougher anti-hawking provisions around the sale of life insurance products, according to Association of Financial Advisers (AFA).
In a submission responding to ASIC’s tough new approach to unsolicited telephone sales of direct life insurance and consumer credit insurance, the AFA has backed the banning of unsolicited telephone sales of life insurance but has warned of the need to avoid unintended consequences.
The AFA said that life insurance was a complex product that should never be sold without the benefit of personal financial advice in circumstances where the average Australian was unlikely to have a good understanding of their insurance needs or the products available.
However, the AFA warned ASIC that the consumer protection messaging around life insurance needed to be carefully modulated to ensure that the value of life insurance was not undermined.
It also noted the anti-hawking provisions and warned against allowing financial advisers to get caught up in the definition of “unsolicited”.
“One important consideration for us is the definition of ‘unsolicited’ and the risk that a financial adviser contacting an existing client about the suitability of their current insurance could be considered unsolicited,” the AFA submission said.
“We also believe that extra consideration needs to be given to financial advisers who work with regional and remote clients, where interaction with their clients is more often done via the telephone,” it said. “We would not like to see this proposal place limitations or additional costs on these regional/remote financial advisers.”
“In addition, given the changes in communication technology, maybe there is a need to address other forms of contact that are possible through social media applications.”