Don’t unnecessarily entangle advisers says FPA

The Financial Planning Association (FPA) is seeking more certainty from Treasury that financial advisers are not going to be adversely caught up in the Government’s proposed new insurance claims handling machinery. 

In particular, the FPA wants it made clear that financial advisers will be able to handle the insurance claims of new clients without having to take on extra licensing obligations. 

In a submission filed with the Treasury in response to the Financial Sector Reform (Claimant Intermediaries) Regulations 2020 the FPA said financial planners were already appropriately licensed and regulated by ASIC and so should not be exposed to any additional requirements to continue assisting their clients with insurance claims. 

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However, the FPA said it was seeking clarification from the Treasury about the application of the exemption in circumstances where a client has changed financial planner and an insurance claim is the first substantive interaction between the client and their new financial planner. 

“This situation can occur frequently for a variety of reasons, including that there is often a significant amount of time between a client receiving advice on an insurance policy and the point at which they might make a claim against that policy,” it said. 

The submission claimed that, in this time, the client’s original financial planner may have retired or the client may have relocated and engaged a financial planner in their new location.  

“It is in the client's interest to be able to receive assistance with their insurance claim from their new planner immediately and the exemption should apply in these circumstances,” the FPA submission said. 




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The Law and Explanatory Memorandum are very clear. Unless a financial planner is 'acting for the insurer' when assisting a client with a claim, the planner is not subject to the claims handling licensing requirements. A planner is either acting for an insurer or they are not - the issue of whether they are assisting a new client (to whom they have not previously given advice] does not come into the equation. FPA just justifying its existence again.

My - conspiratorial - concern on that though is that some of the regulators have suggested in the past that the receipt of commissions creates the appearance that the adviser is 'acting for the insurer'.

What also concerns me is that they were able to find the words to explicitly exempt lawyers, but had to mealy-mouth their way around to sorta-kinda excluding advisers, unless they're acting for the insurer.

It might be the years of regulatory betrayal, but I think we're justified in asking them to put our exemption in actual, plain English for a change.

The Regulator [ASIC] makes it's position very clear, in plain English, in its information sheet attached to Media Release (20-300MR) issued on 27 November 2020. Further, when has the receipt of insurance commissions been considered as the recipient is acting for an insurance company. When a business applies for an AFSL it must state whether it acts for 'the intended insureds' (the client). How many financial planners / AFSLs, who provide insurance advice to retail clients, do you reckon 'act for the insurer'? The conspiracy theories continue.

Billy, the last 15 plus years all I have heard is how Commission (now called conflicted remuneration) mean I as an Adviser do not act for the client. As a result, the Powers that be (Labor, Liberal, Treasury, ASIC - the list goes on) have given Financial Advisers
1) Disclosure, SOA,s BID, Opt-Ins, FDS's a special re-education program to fix our ways in FASEA, a public flogging at the RC, more Opt-in, a look-back program, banning commissions outright, sole purpose, test the list goes on.
Sure, want me to trust Treasury it will all be OK - not likely.
1) BID

Sure, I agree that none of us are actually acting for the insurer.
- But regulators have made a lot of hay complaining about commissions, implying that they mean we're seen to be paid BY the insurer, raising a question about who we're working for. That's why they see such remuneration as inherently conflicted.

- We collect the claims information for the insurer and then pass it on to them, which could be seen as acting for the insurer.

Mind you, I don't believe we are captured by this clause. But given how many times we've been screwed by poorly-or-maliciously designed regulations, I naturally assume the worst whenever some big change like this is announced.

Especially when lawyers receive a specific, legislated exemption but we don't.

Best case scenario, the regulator couldn't imagine that financial advisers would read this and think they'd be covered, which suggests either arrogance or ignorance.

Worst case (and less likely) scenario is that they've kept it opaque and vague to keep an ace up their sleeve next time they decide to chase adviser.

And as for plain English - the sheer complexity of the information sheet highlights just how ludicrous financial services regulation is in this country.

Good point. After many years, I am now starting to come to the conclusion that this regulatory betrayal, Treasury might not only be a problem but might actually be the "head of the snake".

There are several Treasury heads, that have publicly stated they've been charged 3% entry fees on regular contributions and left in AMP products for 20 years, being charged close to 3% ongoing advice fees, that grew in value from not much to even less. Along comes the FPA that gets payments from AMP and the rest is history. Why do you think Treasury appoints board members at the TPB and despite having 22,000 members paying fees to the TPB there is not a single adviser on that board. You'll recall Treasury in their FOFA review said words to the effect "we understand there will be job losses amongst planners but technology and natural market competition (industry super funds) will replace those lost roles over time" This is why I've been saying you can't have the FPA going to Treasury at all whilst it gets payments from large insto's. It will end in more regulation and that's what's going to happen.

Good points - it is clearly personal from Treasury. I also read some of the submissions from Treasury to the RC and I was shocked, one at the personal hatred displayed from Treasury to Financial Planner and secondly that the Public Service had fallen so far in standards. Really very disturbing.
Treasury needs a clean out - or the individuals on personal vendetta exposed.

I have no idea what you are on about. This conversation started out as Financial Planners not requiring a new authorisation to provide services to clients in respect of assisting with insurance claims. You have turned it into a political vendetta.

Government bureaucrats having a personal vendetta against financial planners seems a logical and relevant discussion point to me. Not just on this issue, but most of the big problems plaguing our profession at the moment.

Seems to me that advisers act for both the client and the insurer. They act for the client in recommending a policy that is in the client's best interest. They act for the insurer by doing implementation and servicing that the insurer would otherwise have to do inhouse. That's why advisers should charge clients fees for advice, and receive payments from insurers for implementation and service.

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