November 7, 2017
ASIC is examining how advisers use Approved Product Lists and is investigating whether the range of products on lists is being used to benefit consumers.
Addressing a recent hearing of the Parliamentary Joint Committee into the Oversight of ASIC, the Deputy Chair of the regulator, Peter Kell said ASIC was close to finishing an examination to how APLs were used by advisers in practice.
This work covered two issues, according to Kell, who described the first as “…having a broad range of products on an approved product list – products which are appropriately chosen to ensure that they are suitable for customers”.
“The second issue is even if you have a broad range of products on that approved product list, will the advisers actually choose from across those products in a way that is of benefit for the customers?” Kell said.
“…if you have a broad range of products… will the advisers actually choose from across those products…”
In February of this year, ASIC stated that wider APLs were unlikely to lead to better advice and blamed structural bias and adviser incentives for poor advice (see: Wider APLs Unlikely to Create Better Advice).
ASIC added to those comments with Kell telling the PJC that while the Trowbridge Review had called for APLs to have products from half of the insurers in the market, it would not address the issue of adviser engagement with those products.
“Setting a simple rule like the Trowbridge rule won’t necessarily address that second issue. It’s something we’re very interested in. We are looking at it closely. But it’s not something where we have the ability, in any case, to directly regulate: you must have this many products on your APLs,” Kell said.
Responding to questions about the size of particular APLs, Kell said most consumers would expect an adviser would have a range of products to choose from, but he avoided commenting on specific advice groups.
“If you are providing personal advice to a client that is designed to be in their best interests and appropriate for them, it is going to be potentially a lot more difficult if you only have one product on your list,” Kell said.