Associations offer mixed responses to ASIC insurance critique
Industry associations have produced mixed responses to the release of a report into life insurance advice with two bodies forming a working group to address concerns and another calling for life insurers to examine their product offerings.
The Financial Services Council (FSC) and the Association of Financial Advisers (AFA) have formed a working group to address concerns raised by the Australian Securities and Investments Commission (ASIC) while the Financial Planning Association (FPA) said the findings of the report highlighted a need for insurers to examine their own products.
The AFA and FSC said in a joint statement that The Life Insurance and Advice Working Group (LIAWG), to be headed by an independent chair, would seek to "specifically address retail life insurance product structures and distribution practices".
FSC chief executive John Brogden said the working group would produce an initial report on its findings within two months and a final report early next year
"The ASIC report requires a serious response from the industry. We have formed a working group to achieve this. The working group will consult with the regulators and Parliament on its solutions," Brogden said.
"The financial advice and life insurance sectors will work together to carefully examine the findings and recommendations in the ASIC report and to assess all options to improve market practices and sustainability."
AFA chief executive Brad Fox stated it was critical the wider financial services sector consider the report the AFA would "work closely with the Financial Services Council and other associations to establish the working group in order to ensure an industry-wide response".
As part of its work the LIAWG will review ASIC's report and provide an initial response by December and a full response early next year and would look at what actions needed to be taken by the industry and where it believes regulatory assistance should be provided.
The FPA stated that it was unaware if any of its members were with involved with the advice provided by the nine licensees and 79 advisers examined by ASIC in the course of its investigation to compile the report but said it has less than one compliant per year since 2009 regarding life insurance advice.
FPA chief executive Mark Rantall said while the report highlighted that adviser professional standards needed to be lifted it also showed that a number of the problems in the sector related to product design, regulatory barriers, pricing and public confidence in insurance companies.
"The issues of product design, distribution and embedded product commissions should be looked at by the product manufacturing sector as noted in the recommendations of the report," Rantall said.
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