FSC Life Code to Focus on Consumers First, Advisers Later

The Financial Services Council (FSC) has launched its Life Insurance Code of Practice stressing its emphasis has been on consumer protections.

FSC CEO, Sally Loane

FSC CEO, Sally Loane

FSC Chief Executive, Sally Loane said the Code will become mandatory for all FSC Life Insurer members from 1 July 2017 and had been developed ‘first and foremost for consumers’ to lift insurer practices and obligations to meet consumer needs and expectations.

Loane said the FSC was aware of the need to deal with the role of financial advisers in the life insurance process and described their role as ‘incredibly important’ but added that the Code, which is in its first iteration, was for consumers.

“The relationship between insurers and financial advisers is an important but different one, and we are committed to working with the peak adviser organisations to address mutual obligations,” Loane stated, adding the Code would work in conjunction with the pending Life Insurance Framework legislation to tackle issues around inappropriate remuneration.

The Financial Planning Association and the Association of Financial Advisers had called for greater adviser consideration in the Code as part of their submissions to the FSC when the latter was seeking industry input on a draft of the Code in August this year.

“…advisers will have a set of standards to which they can, on behalf of their customers, hold insurers accountable…”

Speaking at the launch, industry expert and former Australian Prudential Regulatory Authority member John Trowbridge said the code would bring consumers closer to insurers but would not lessen the role of advisers.

“I think it will enhance the role of the adviser, because now advisers will have a set of standards to which they can, on behalf of their customers, hold insurers accountable,” Trowbridge said.

“Equally, if consumers are unhappy with what is going and their advisers does not appear to be helping this gives them the means to go directly to the insurer. There is a reinforcing and cross accountability between adviser, customer and insurer,” he added.

The FSC also stated it was developing standard definitions for trauma insurance (See: Standard Trauma Definitions Announced) and that compliance with the Code would be enforced by an independent committee of three people – the Life Code Compliance Committee – selected by the Financial Ombudsman Service.

Members of the committee had not yet been chosen but Loane stated it would include a consumer advocate and the Committee would have the power to ensure member compliance with the Code. The FSC stated it may seek to boost the level of enforcement of the Code and is considering making an application for ASIC approval of the second iteration of the Code.

  • Jeremy Wright

    Can Sally Loane emphasis “how” its Life Insurance code of practice will benefit and
    protect consumers.

    “What exactly,” will be the end result of these supposed Insurer practices and obligations that will meet consumer needs and expectations.

    Loane admits the FSC code in its first iteration, was for consumers. Can she “Please
    explain” in plain English, so the Parliament and all of us can find out what “actual”
    benefits the consumer will receive.

    She seems to admit that the FSC has little idea of the role of advisers and parrot
    like, she falls back to the same mantra of; “ tackling issues around inappropriate
    remuneration.”

    The one advantage of allowing spokespeople who “purport expertise”, to speak, is that
    very quickly they show their lack of knowledge.

    The danger is, that unless challenged, people start to believe the false words and
    utter tripe that propaganda is designed for, being that if you say it long enough and loud enough, people think it must be true.

    The solution is simple.

    When gurus like Sally Loane, or John Trowbridge start talking, challenge their
    assertions with, “What” exactly is the problem. “Why” is this a problem. “How” did you come to this conclusion. “What” facts, questions and information did you collate to come up with your reasoning. “Why” do you believe your solution is the best solution and based on what evidence.

    The FSC developing standard definitions for Trauma Insurance, highlights again, they
    are novices.

    I would have assumed that after many months of investigations and reports into
    misconduct with some of the big end of Town Insurers who happen to be FSC Life
    Insurance Members, that the FSC would have been able to come up with something
    better than a vague future promise and of course, another committee to be formed with a consumer advocate, probably Choice or a consumer law firm who will do a wonderful job, them being experts in Insurance.

    What you see is what you get with the FSC.

    Many Words, little sense and lots of smoke screens and mirrors.

    • BKY

      Well said Jeremy. Sounds like another attempt by the FSC to bamboozal everyone with a whole heap of waffle. I think you used the term “smoke and mirrors”…brilliant! If the FSC is serious about moving closer to consumers, then why don’t they stop closing product series and give our customers ALL definition upgrades? This would give everyone confidence in the processes and the products.

  • Warren B

    “FSC Life Code to Focus on Consumers First” – isn’t this an oxymoron?

    How can Sally Loane describe the role of the adviser as ‘incredibly
    important’, when the FSC is all for reducing our income quite dramatically?

    Jeremy Wright has put it very well when he asks “What”, “Why” and “How”. Come on Ms Loane and Mr Trowbridge – If you are both so sure about what you are saying, then back it up by answering Jeremy’s questions. Put your answers on risk info for all to see!