ASIC Accepts EU From Adviser Over Life Insurance Failures

The Australian Securities and Investments Commission (ASIC) has accepted an enforceable undertaking (EU) from a Queensland adviser after finding he failed to meet his obligations as an adviser in regards to advice provided on life insurance.

The regulator accepted the EU from Jason Churchill, who was the sole director of Churchill Consulting Services Pty Ltd in Carrara, Queensland, and was an authorised representative of ClearView Financial Advice at the relevant time.

According to ASIC documentation the EU took effect from 6 January 2016 after being accepted by Churchill on 23 December 2015, however ASIC has not stated when the failure to meet obligations took place. The regulator noted in the EU document that the failures were identified in the course of its surveillance which included a review of Churchill’s client files.

In that review ASIC stated it found that Churchill’s advice “…relating to the replacement of personal insurances did not meet the standards expected of a financial adviser and that he had failed to comply with financial services laws.”

Specifically, ASIC stated that Churchill had

• failed to undertake adequate inquiries into the relevant personal circumstances of some clients to whom he made recommendations
• failed in some instances to provide adequate replacement product advice to the client in the Statement of Advice, preventing the client from making an informed decision to switch insurance cover
• inadequately demonstrated in some cases the benefits of a stepped or level premium
• failed in some cases to consider the competing priorities of adequate insurance versus affordability, including the longer term impact of placing insurances within superannuation
• limited the advice in some cases to exclude issues which cannot reasonably be excluded from the scope of advice.

Under the conditions of the EU Churchill has agreed to a set of undertakings as an alternative to ASIC taking administrative action or civil proceedings against him or Churchill Consulting Services.

These will include undergo additional training in relation to the provision of financial product advice within one month of the start of the EU, particularly in the areas of insurance needs analysis, investigating and assessing existing and new alternative products prior to making a client recommendation, providing replacement product advice comparisons in a Statement of Advice and demonstrating how insurance premiums within superannuation can reduce superannuation balances.

Churchill will also be required to adhere to strict supervision requirements for 12 months and have each piece of advice audited by his authorising licensee before it is provided to the clients.