ASIC spotlights 3rd party advisers on super insurance messaging

31 October 2019

The Australian Securities and Investments Commission (ASIC) has claimed it has seen some examples of communications from third parties such as financial advisers about insurance inside superannuation which “have lacked balance and context”.

In a letter sent to superannuation funds ahead of the Government’s implementation of its new Putting Members Interests First legislation, the regulator specifically referenced advisers and its ability to take action against them.

Under the heading of “Other ASIC Concerns” the letter said: “ASIC has seen examples of disclosure from third parties about the reforms that have lacked balance or context”.

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“ASIC can take action against third parties, including advisers, who make misleading statements about the changes. Trustees need to ensure that advisers and others that they interact with are provided with accurate information,” the letter said.

The ASIC letter to superannuation funds has made clear that “communications should be developed with the member’s best interests as a priority” and suggested that members should not be left with the impression that the only option was to retain insurance.

“Trustees should not solely communicate the benefits of one option. In particular, it may be important to explain why ceasing insurance cover may be appropriate,” it said.

It said ASIC had been systematically reviewing a sample of disclosures concerning superannuation funds and the manner in which they handled the earlier Protecting Your Super legislation.

“Our sample included both insurance and inactive low balance communications. A number of trustees have failed to meet the needs of their members in the communications issued to date and we are actively exploring whether enforcement action is an appropriate outcome in some instances,” it said.

“We will continue to review a selection of member communications and anticipate highlighting good and bad examples of these in future public statements.”

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Why dont we just cancel all cover and let centrelink look after people, pay their mortgage and get them the best possible care. I just do not understand this industry anymore

what examples? Can you show us the examples of advisers lacking balance and context in terms of these changes? Or Just another change to blame us advisers? Oh yes advisers do this and that, oh asic why are you such a bunch of flogs why not work with us not against us. If would make all our lives easier.

It's not about about making our lives easier it's about getting better results for all clients.

You are correct though, the ingrained cultural disdain ASIC has against the industry is actually not in clients best interests. I tried to engage with ASIC years ago to be more integrative and consultative in their approach rather issuing edicts from the mount that are either non nonsensical, expensive and inefficient to implement or not even achieving the outcomes they claim to be targeting.

They are keystone cops who don't actually understand what they regulating.

If they engaged in a co-operative and collaborative manner we would get better results for clients, get rid of the small remaining percentage of trash advisers in this industry and drive down costs for business.

Maybe I'm just a naive optimist and wish for things that will never happen!! :-(

Maybe you both don’t know, but ASIC is really following the lead set by choice. They called out the protecting your super campaign as being misleading. Are you really suggesting a regulator should ignore a consumer group!?!

I don’t agree. My wasted efforts to engage with ASIC were some 7-8 years ago. Secondly Choice accepts payments from product manufacturers but I’m sure there’s no conflict!

Is that the new daily run in conjunction with the industry funds? Need to do better than quoting that leftist rag, more bias than a lawn bowl.

Its time ASIC was told they are no longer relevant.

ASIC is just continually trying to put notches on its gun it is and out of control bounty hunter from the Wild West, advisers are a soft target so its easy to go rabbit hunting, just to make themselves feel good. Maybe just shut the whole industry down because it surely hates advisors.

lacked balance or context
Sounds like the SMSF data released by ASIC?

I will admit that linked video was difficult to watch. FASEA attach zero value to adviser experience and ongoing training. “Degree level” is adopted as a line debasing ANY prior training or experience.

If there were no mandatory exam, I could see some vague logic in this stance. Combine the exam with ongoing legislative minimums, audit stringency at a NASA-level redundancy standard, multiple monitoring and penalty regimes - and you have to assume that the intent is simply to cull experienced advisors out of the industry.

I could even grant this as vaguely understandable, if there were some ‘tiered’ aspect to education standards - but there is not. Regardless of the day-to-day activities of the advisor, the same benchmark is applied. There may be academic reasons why this is ok, but it treats humans as trash and fails in any number of ethical viewpoints.

What is wrong with FASEA identifying the issues their standards cause, and highlighting these to government, with appropriate remedies?

There is an amazing level of disregard being paid to advisers generally in amongst todays debates. It is no wonder I see so much mental health impact in the industry.

So are ASIC threatening Advisers for expressing an opinion? There are two sides/opinions to this legislation, and why an Adviser cannot express their professional opinion is beyond me. It just shows their stance is against Advisers.

ASICk Joke are laughable talking about biased publications when they are the biggest perpetrators of this very act! LIF lies, SMSF figures that were derived from their collective arses, make believe consumer best interest or adviser satisfaction study groups with core samples below what any decent academic would consider viable for a preschooler's project.

Laughable lawyers who couldn't make it in the courts and now are overpaid and the more made up shite they scrape up, the more long term their patheric jobs remain in place for. Got to love them perks in the not quite civil service officialdom land.

F'wits, all.

This is a very good example of the lack of context in public debate.

Choice suggest consumers are being misled about the value of retaining insurance - "CHOICE said some messages read like “attempts to manipulate people into taking up or maintaining insurance cover that they may be unable to claim against” – conduct which it said falls short of the industry’s standards of efficiency, honesty and fairness."

If insurance cover includes a work-test rule then it is clearly a member's-best-interest procedure for Trustees to inform members of this via regular communication, especially those members who hold what appear to be 'inactive' accounts.

However, the low-balance-inactive account legislation caught a lot of people unawares. Our business is still encountering people who are disappointed to find that their insurances have been cancelled. Protecting low balances is great, and more should have been done earlier to help protect those balances - but cancelling insurance cover is a very big step, and one that is highly questionable in terms of "best interest".

It's only an opinion, but it is my thought that the legislation was implemented too fast, with minimal thought to transitions that allowed for standard member life issues - like holidays; not reading super fund letters or emails; misunderstanding etc.

ASIC has a tough job - trying to implement broad policy against a raft of individual situations. We saw a lot of different approaches to the legislation across super funds - some better than others. I think it would be helpful if ASIC were to use more resources to guide implementation of legislation, and to provide feedback to legislators of the impact of changes being considered. So many measures are implemented with little thought to legacy positions or basic member attitudes and habits.

Saving $120 in premiums for a year is great, but dependents receiving $80.000 less from an estate may be a more material issue during the course of that year. Standard feedback rates for broad-based email or newsletter campaigns are usually around 2-7% at best. That simple fact suggests that material impacts should be implemented over multiple member communication cycles to help ensure more members are fully engaged in those changes.

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