- No (87%)
- Yes (13%)
- Not sure (0%)
Advisers overwhelmingly agree that partial cover reductions should not be taken into account by ASIC when defining lapses, while uncertainty remains as to exactly what does, or should, constitute a lapse in the first place.
In the lead-up to the commencement of the three-year Life Insurance Framework transition period, 87% of those casting their votes in our latest poll disagree that partial benefit reductions should be taken into account by ASIC as a lapse criterion. However, one in eight voters (13%) support partial cover reductions as a valid lapse criterion.
…it is inherently unfair to classify this action as a lapse
In framing this question the way we have, it would seem – purely from a logical and moral stand-point, that if a partial benefit reduction on a life insurance policy will serve the best interests of the client, and the adviser acts accordingly, it is inherently unfair to classify this action as a lapse (see: Calls to Review ASIC Lapse Definition).
We understand that ASIC’s counter argument goes along the lines we mentioned last week, being that some advisers may significantly reduce their clients’ insured benefit within the first one or two years of the policy, but not cancel it, in order to avoid a commission clawback (see: What’s a Lapse?).
It would hold value if ASIC could release any data in its possession about the incidence of partial benefit reductions inside the first two years of a policy. Is it widespread? Or does ASIC’s position unfairly penalise what we suspect is the significant majority of advisers who are genuinely acting in their clients’ best interests when reducing their benefits accordingly?
Advisers and other industry stakeholders appear to be seeking two key outcomes when it comes to defining what constitutes a lapsed policy:
- Fairness
- Clarity
We will continue to monitor and report on this debate as our poll remains open for another week…
Just shows you these Public Servants in a job for life have no idea what actually happens with families struggling in the Real World! Only a Public Servant would look at a situation and come up with a negative, surely having some cover in place instead of none is in the clients “Best Interest”. Or did the FSC put them up to it? Most likely, a Public Servant would not know how the Industry works anyway
ASIC obviously doesn’t know how a claw back works! If an adviser ‘significantly reduced their clients cover in the first year of cover – but not cancel it – they would still get a write back on the portion cancelled? Who advises these morons?
This regulator is a damn disgrace. They have no idea about what really happens in this industry or what clients need.
They’re an organisation that’s sole purpose is finding fault in everything so what else are they going to do to save their despicable careers but intervene and impose ridiculous red tape wherever they can. They’re the opposite of what they say they are when it comes to protecting consumers. They’re damaging this industry relentlessly.
I have no respect for this organisation whatsoever with anything it does.
It would also hold value if ASIC asked clients WHY they decided to reduce their policies within the first and second year.
It gets back to the same argument, in that getting data with no or little knowledge as to why the data is important, or worse, not asking for data based on specific requirements,
means the data is worthless, or can be manipulated to suit a specific purpose, which to date, has been to spread information that is not accurate and in the case of the LIF, the FSC and other vested Interest groups, were able to sell the Government a pack of lies to push through their own agenda.
The first casualty in this whole ongoing fiasco, was and still continues to be, Fairness and Clarity.
Riskies, lets all go work for ASIC. You will have to lie in the application and state that you have no experience in the financial services industry. Probably best to drink some drain cleaner before you go into the interview too so you fit in with their low IQ requirement.
Once in the job, just do what you are told by the banks and reduce the competition to their direct insurance wings by banning well meaning independent advisers. Then in a few years you can leave the government job and go sit on a well paid bank board and claim the fruit of your work at ASIC, which was focused on destroying the lives of advisers, ensuring mum and dad clients get no advice and have to speak to Lawyers at claim time, whilst enriching your masters at the Banks.
Please Please Please have a Royal Commission into ASIC. I wonder how much the banks (through the bank owned FSC) currently pay Trowbridge and have previously paid him for creating some figures and false reports to coerce the regulators to legislate to increase the bottom line of the banks.
Dont even get me started on the Health Insurance rort. Its amazing how the insurers/banks own our politicians and government departments.
I wonder how many Industry Super Fund or FSC staffers were busy responding to the survey to create the 13 % result that actually agrees with this proposal?
Surely David Whiteley and Sally Loane couldn’t have done it by themselves?
I suspect the only yes voters on this poll will be insurance company reps. Advisers don’t recommend clients reduce cover. Its just the harsh reality today. The FSC members have been collectively raising premiums at unprecedented levels. If a client gets a 30% increase in premium over a year and their salary has increased by 1% what choice is there sometimes? Many clients are rightly angry and want to cancel cover so reductions are the only way for an adviser to allow the customer some level of cover. Circumstances change too so the adviser should not be unfairly punished.
The LIF was supposed to be about fixing churn (which now doesn’t exist) but is in a reality just a profit grab by the FSC members.
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