ASIC reviewing LIF but don’t mention REP 413
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?”
Recommended for you
Advisers at DOD Bookkeeping, which received an $11 million penalty last week, received as much as 40 per cent of their remuneration via a bonus when clients purchased a property via a SMSF, according to court documents.
Private wealth manager Escala Partners has launched an end-to-end investment platform to strengthen its alternatives capability as clients seek sophisticated vehicles.
Perpetual Wealth Management has hired two advisers from Ord Minnett as part of five hires, just weeks after the rival firm announced it had picked up six from Perpetual Private.
ASIC has cancelled the AFSL of a Perth financial services firm following payments to its clients by the Compensation Scheme of Last Resort after a failed managed investment scheme.
