The Australian Securities and Investments Commission (ASIC) has applied the brakes to work it is doing on life insurance advice and grandfathered conflicted remuneration to help financial advisers navigate the extraordinary times being generated by the COVID-19 pandemic.
In a question and answer document issued advisers and licensees on Friday, the regulator said that to reduce the regulatory burden on financial advisers, it was:
- Delaying work on life insurance advice. We will not ask you for client information or for your client files at this time; and
- Delaying work on grandfathered conflicted remuneration, which we commenced on direction from the Treasurer. We will not ask product issuers for data at this time.
ASIC said it would be recommencing this work at a future date but that, “in the meantime, we expect product issuers to turn-off their arrangements as soon as possible and by no later than 1 January, 2021”.
“All rebates and/or reductions in fees should be passed on to consumers as quickly as possible. We have communicated separately with product issuers about this.”
In a further measure, the regulator said it would be allowing additional time for industry to respond to ASIC notices.
The ASIC document also makes clear to advisers and licensees an element of flexibility around the delivery of advice provided satisfactory records are kept and noted that the Corporations Act allowed for delayed financial services guides (FSG) and statements of advice (SOAs).
On the question of life insurance, the document stated: “ASIC is currently monitoring developments in the life insurance industry, including the possible introduction of exclusions for pandemic cover for new policies.
“The situation is moving rapidly, so you should be cautious about recommending replacement cover to your clients during this time. Most consumers that currently hold retail policies should be covered for pandemics.”