The Australian Securities and Investments Commission (ASIC) has admitted that it would be inappropriate to use the same controversial report which triggered the Life Insurance Framework (LIF) as the baseline for its review of current review of the LIF.
What is more, ASIC has acknowledged that the controversial report, REP 413, was in any case based on issues which substantially predated not only the LIF but the Future of Financial Advice (FOFA) reforms.
Answering a question on notice from Queensland Liberal back-bencher, Bert Van Mannen, ASIC sought to explain why, despite the manner in which REP 413 had influenced the Government on LIF, it would not be used as a baseline for the LIF review.
“It would be inappropriate to use REP 413 as a baseline for the LIF review,” the ASIC answer said. “The advice reviewed in ASIC Report 413 was provided over four years prior to the introduction of the LIF reforms and approximately half of the advice was provided prior to the introduction of the best interests duty and related obligations as part of the Future of Financial Advice Reforms.”
“ASIC was asked by Government to consider the extent to which the LIF reforms have improved the quality of advice. ASIC is therefore assessing the quality of advice for two randomly selected samples of personal life insurance advice files: one sample of files from 2017, shortly before the LIF reforms were introduced and one sample of files from 2021, shortly after the LIF reforms were fully phased in,” ASIC said. “This will allow ASIC to compare results to see if the quality of life insurance advice has improved since the LIF reforms.”
The ASIC answer comes against the background of life/risk advisers have consistently argued that REP 413 had represented a selective assessment of the reality of the life insurance sector, particularly with respect to churn.
Van Mannen had asked why REP 413 was not being used as a baseline, given that “If the trigger for the LIF reforms was the 2014 ASIC Report 413, then why isn’t this the baseline for the review, rather than 2017, which was well after the spotlight was placed on life insurance advice?”
Comments
Let’s just make up some new goal posts to suit our preconceived opinion.
ASIC won't use REP 413 because it targeted high volume advisers suspected of churning. So it would not be a fair comparison if the research is done properly. The real quistuons that should be asked are: 1) why was REP413 used by ASIC and the media to defame the wider financial advice sector (ie. the vast majority of advisers who do not write high volumes nor churn); 2) how has the availability of advice and cost of advice changed between 2017 and 2021?; and 3) how have insurance premiums changed between 2017 and 2021? In other words, are consumers actually better off? I doubt these questions will be answered by ASIC as they are driven by an extreme, anti-adviser, ideological agenda and the LIF reforms, which they lobbied for, have been a complete disaster for consumers. We need an independent investigation into LIF. The financial advice sector has completely lost confidence in ASIC.
There should also be some investigation into the shift from high quality advised policies, to dodgy direct policies that are much harder to claim on. While ASIC would regard this as a win because it aligns with their primary objective of harming advisers, it is a big loss for consumers.
I just got notice clients IP policy is due for a 72% increase in premium, so yeah, LIF is working tremendously for consumers isn't it! Consumers are far worse off, to the point the whole insurance industry is on its knees.
How much does LIF have on life premiums. Far as I know it’s high claims rates and increase in mental illness claims.
well 100% of the files reviewed were held up against FOFA, so there seems an obvious issues?
Maybe ASIC would also like to look at how many less advisers are even offering insurance advice now. This number is vastly lower than how many are showing on the register as being licenced to provide advice. I know there are 2 in our office. We try and avoid it like the plague as there is no money to be made in insurance advice unless the premium is at least $5,000pa. This knocks out a large portion of the population who are now less likely to be able to get advice than ever before.
Another case of the people making the rules having no idea how the real world works.
It's a No win situation...
If ASIC use REP 413, the advice quality would certainly improved, because the selective process couldn't have been worse, so ASIC: "I think we're on the right track" :P
However not considering REP 413, they will just make up a new lie to vindicate LIF: "We've unfortunately been caught out on REP 413, so we now have to make up a new lie to show we're on the right path"
As was stated above by Jamberoo and Anon, ASIC should look at the wider ramifications, but they won't, because they won't admit that they have single-handedly destroyed the Life Insurance industry.
New year, same corruption from ASIC. Of course they cannot mention report 413 because it was a corrupt report and they want to sweep it under the table.
1. They approached the insurers to find out which advisers had the biggest lapse rates and reviewed a mere 200 files from these targeted advisers. They wrote a corrupt report to get the result they wanted.
2. ASIC admitted they they got it wrong on churn after the LIF was passed. They admitted it.
3. ASIC refused to release the details around how the report 413 findings were achieved siting "privacy reasons" because they knew it was dodgy.
Now ASIC just want to cover this up again because the results of the LIF have been a disaster for customers, advisers and the industry and ASIC and the FSC are to blame for this.
Mark my words ASIC will now target files to show a miraculous improvement in advice that was ok in the first place to cover their corruption up.
The biggest issue resulting from the LIF is that the insurers have been increasing existing policy holders premiums at exorbitant levels for the passed 3 years. At the same time and owing to new business drying up they have been heavily discounting premiums for new business. So existing healthy customers have no option but to change policies.
Every customer I review at the moment would get a significantly better premium if they "churned" their policy back to either the same company they are already with or another company.
ASIC and the FSC have in fact increased "churn" and increased lapses and increased underinsurance.
The LIF has failed on every level.
New year, same Corrupt ASIC.
ASICs Regulatory Capture Corruption of everything Anti Advisers must be stopped.
These fake news selective reports they create or pay academics to write for them are total frauds.
ASIC are total frauds.
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