September 5, 2017
ASIC has defended its placement of advice fees at the front of the sample life insurance Statement of Advice (SoA) telling a Parliamentary Joint Committee that it was a response to a request from Government.
The regulator added a final decision on the matter had not been made and that it was considering similar forms of disclosure for life insurers and other product providers.
The comments were made as part of a recent hearing of the Parliamentary Joint Committee into the Oversight of ASIC in response to a question from Committee member Bert Van Manen, MP.
In his question, Van Manen asked why the example SoA recommended upfront disclosure of fees and commission while other ASIC guidance to product providers did not require the same placement and breakdown of fees and charges.
In response, ASIC Senior Executive Leader, Financial Advisers Louise Macaulay said, “This particular exercise around the sample SOA is not a template by any stretch; it’s a sample SOA. It was directly in response to a request from the government as part of broader life insurance reforms. And the Minister specifically said prominent up-front statements about commissions, and we acted on that and did that.”
“It was directly in response to a request from the government as part of broader life insurance reforms…”
Van Manen said he was concerned with the inconsistency of application of disclosure requirements for advisers compared to product providers and that “…my concern in this whole space is that advisers have been the easy target and have paid an enormous price for that, yet the product providers and other manufacturers upstream have got off scot-free for a lot of their failures and inefficiencies”.
Responding to this, ASIC Deputy Chair, Peter Kell said the regulator was a strong supporter for greater disclosure across the board and it would work towards this being implemented for product and advice providers.
“We are strong supporters of the government’s initiative to introduce the design and distribution obligation arising out of David Murray’s inquiry, which… rebalances accountability so that it’s not just on the adviser but there’s accountability more squarely put on the product manufacturer, the designer, as well,” Kell said.
“I think that reform, which is currently being consulted on and looked at, is very important in that respect, because I think you’re right: the accountability has not been appropriately balanced across the supply side,” Kell added.