FSC urges life APL choice
Life insurance approved product lists (APLs) must have a choice of multiple life insurance providers and be backed by solid off-APL processes to enable advisers to recommend alternative products and providers not on the APL to meet best interest obligations, according to the Financial Services Council (FSC).
In releasing a draft APL standard for consultation, the FSC said the standard would be compulsory for all FSC members once approved, where APL construction practices endorsed completive access and choice for advisers and their clients.
“To ensure consumers have full transparency to make an informed choice, disclosure of how many products and providers are on the life insurance APL will also be included in the advice process, namely in the statement of advice (SOA),” the FSC said in a statement.
The draft consultation said life insurance licensees would be supported by efficient approval processes that would consider insurance offerings outside the APL, where advisers who wished to use insurance products and providers that were not available on the Australian financial services licence’s (AFSL’s) APL would not be restricted from doing so.
However, it said this requirement would not apply where the life insurance APL was “open” and included all life insurance providers that provided for the retail market.
“AFSL members should focus on life insurance APL construction that provides a range of options for their advisers to deliver advice in their client’s best interests. To this end, it is required by this standard that life AFSL members must apply a reasonable basis to APL construction,” the FSC said.
Life insurance APLs should consider claims and underwriting philosophy of providers, product features, benefits and consumer value for money, and relevant product research and service metrics.
The draft also outlined best practice principles, which were not compulsory, but were encouraged to maintain a life insurance APL.
Best practice principle examples included:
- Having an experienced investment and product committee of experienced research professionals to aid with the licensee’s internal research processes;
- Establishing a benchmark methodology and implementing this to identify which products were suitable for inclusion on the APL; and
- Considering a myriad of factors when assessing the suitability of an insurance product/provider on the APL.
AUTHOR
Malavika Santhebennur
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