ASIC confirms insurers’ knowledge of churn
The Australian Securities and Investments Commission (ASIC) has confirmed that life insurance companies have been aware of advisers being guilty of “churning” policies but have failed to notify the regulator.
That confirmation came during a hearing of the Parliamentary Joint Committee on Corporations and Financial Services during which ASIC deputy chairman, Peter Kell, confirmed the level of the regulator’s knowledge.
The confirmation will annoy a number of life/risk advisers who have consistently argued that if the regulator wanted to crack down on churn then it should be working with the major insurers who hold the relevant data.
The issue was raised with Kell by Queensland Liberal National Party backbencher, Bert Van Manen who said the insurance industry needed to hold its hand up and become accountable on the question of churn.
“There are any number of insurance companies I have spoken to who actually know who these people are,” van Manen said. “A number of insurance companies will put them on level commissions. The dealer groups know who they are because they can tell by the revenue reports and replacement policies.”
Kell replied that it was interesting van Manen had made that observation “because, in collecting this information from the insurers, we have had a few instances where insurers have said, 'Oh, yes, well, we thought that name would pop up’”.
“…I suppose we [ASIC] have been a bit disappointed in some instances that, if it is clearly an issue, it has not been drawn up before,” Kell said.
Recommended for you
Over half of wealth management clients in Asia-Pacific say they are looking for more advice in investment and financial planning services, according to EY, and may switch or add new providers to achieve this.
As artificial intelligence continues to reshape how the advice industry operates, Adviser Ratings unpacks which areas advisers are using the technology to improve the client experience.
Insignia Financial has appointed the former APAC head of a global asset manager to its board.
Financial advisers have been warned against advising clients to withdraw superannuation for medical or dental treatments as a new report highlights the long-term effect on balances at retirement.