Poor advice relating to life insurance is not a marginal issue or undertaken by a few rouge advisers but is a systemic issue according to the Australian Securities and Investments Commission (ASIC).
Speaking at the Money Management/DEXX&R Adviser Choice Risk Awards this morning ASIC deputy chair Peter Kell said work conducted by the regulator indicated this was a problem through the life insurance manufacturing and advice sectors.
Kell said that while ASIC has raised issues around the quality of advice and commission in its most recent report it had seen ongoing and recurring themes in the quality of life insurance advice over the years.
"Poor life advice has been a recurrent theme over many years, including in major surveillances of planning groups that have lead to bannings and and even revocation of licences. A common theme is conflict of interest around remuneration overriding good advice," Kell said.
Kell stated that ASIC had addressed these issues with the advice sector in the past, particularly before the introduction of the Future of Financial Advice (FOFA) reforms, and said having to address the same concerns again was akin to ‘Groundhog Day'.
"Hopefully, unlike the lead character in that movie we are not destined to repeat the past until we have an epiphany of what everyone else can already see," Kell said.
"Complying with the law is not a high benchmark. It is not a gold standard approach for advisers and we want to encourage efforts to change products and advice because we do not wish to be back here in 18 months and recycle the same lines."
Kell called for the life insurance sector to move away from a sales culture as ASIC would not shy away from further reviews and action if it continued to see the same problems it recently identified.
"Industry as whole need to grasp the nettle and respond to the complex set of challenges that exist.," Kell said.
"However difficult is not the same as impossible and ASIC agrees with the view that manufactures should stop trying to leap frog each other on definitions and focus on consumers.
"ASIC is focusing on this space because it is an important sector and fundamentally important in helping people manage risks in their financial lives. This has been reflected in public policy terms as well because it has become woven into super system."
