November 14, 2017
Any efforts to expand the FSC’s Life Insurance Code of Practice so that it was mandatory for advisers would make it less useful for consumers, the Council has told the PJC Inquiry into Life Insurance.
In a Question on Notice dated 27 September but released by the PJC this week, the FSC stated there would be only one advantage to having the Code made mandatory for advisers and superannuation fund trustees but listed a number of disadvantages to the move.
“The main advantage would be for consumers to have a single Code that covers the activities of all industry participants in the provision of life insurance,” the FSC stated in its response, before adding that expanding the Code may diminish its effectiveness.
The FSC stated the LICP placed obligations on its members who provided life insurance, but not on the work of advisers and trustees which “…undertake very different activities in the provision of their services”.
“This would be a significant undertaking…which might make it less approachable for consumers.”
“It would be possible for FSC to reframe the FSC Life Insurance Code of Practice so that it additionally covers the different activities of advisers and trustees in the provision of life insurance,” the FSC stated.
“This would be a significant undertaking. In including these different activities, the FSC Code would need to be extended very significantly, which might make it less approachable for consumers.”
“Depending on the type of cover a particular consumer has, and how they obtained it, large parts of a combined Code are likely to not be applicable.”
At the time the LICP was launched the FSC stated the relationship between life insurers and advisers would be covered in its second iteration (see: FSC Life Code to Focus on Consumers First, Advisers Later) and invited non-members in the financial services sector who deal with life insurance to be bound by the Code.
At present, only the 22 life insurance members of the FSC have committed to the Code which come into effect on 30 June 2017.