Cheapest and top-rated not always best
Best interest duty in the life/risk arena should not be interpreted as meaning that consumers should have the lowest cost product with the highest research rating, according to AMP Limited.
Answering questions on notice from the Parliamentary Joint Committee on Corporations and Financial Services, AMP made clear that it believed that the price of an insurance product and how it was rated should not be regarded as immutable factors in the best interest duty equation.
“The Committee raises a very interesting and complex issue on research houses and best interest duty (BID),” the company said. “AMP considers that BID should not be interpreted as meaning that consumers should have the lowest cost product with the highest research rating.
“Customers seeking insurance through an adviser require a comprehensive (or scaled) analysis of the customer's unique personal and family circumstances in order to provide advice that is in their best interest,” it said. “Obviously price is an important feature. However, other issues are also important, such as benefit design, trade-offs in terms of affordability and other goals that the customer may wish to achieve.”
AMP said that while research houses did play an important role in the industry, in addition, licensees like AMP, conducted their own independent research to construct [approved product lists] APLs so that advisers had access to high quality products that met the needs of the range of customers who sought financial advice.
“In some circumstances, customers may need a product which is not on our APL. In these circumstances AMP has a robust 'off-APL' process to ensure that the needs of these customers are serviced in compliance with the BID,” it said.
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