Professional insurance advisers may be able to breathe easier than expected after the Banking Royal Commission’s anti-hawking recommendations come into effect, a financial services law firm believes, as it looks unlikely that they will be significantly impacted by the proposed changes.
Commissioner Kenneth Hayne recommended that the Australian Securities and Investments Commission’s (ASIC’s) Hawking Guide be enshrined in law, which would see telephone calls treated as unsolicited meetings and a possible increase in scrutiny of general insurance in add-on contexts.
According to the Fold Legal, insurance advisers would generally be protected from the changes as most offers of insurance they make would be solicited because of their previous dealings with clients, the nature of their engagement, and because a reasonable person would expect to discuss insurance options with their broker.
These would cover the guidelines offered by ASIC on how advice becomes solicited, in addition to a consumer explicitly saying it is, and Charmian Holmes and Jamie Lumsden Kelly of the Fold believe that there’s no reason to believe any anti-hawking legislation would be different.
Indeed, the two lawyers wrote that providing appropriate advice often required insurance advisers to discuss the benefits of various insurance products.
“Where a consumer deals with an insurance agent, it may be more difficult to offer an alternative product unless it was within the scope of the consumer’s initial request or reasonable to expect that that product would be discussed,” they wrote.
“This might occur where it is clear the insured is enquiring about the wrong kind of product for the risk. That said, agents and insurers are already challenged in cross-selling in this way because they cannot tell the client what is best or appropriate for them.”