January 9, 2018
The Financial Services Council (FSC) has released its new standard for life insurance approved product lists (APL) and will require all members who provide financial advice to offer a minimum of three life insurance providers on their APLs.
The finalised standard was released prior to Christmas and commenced on a voluntary basis from 1 January 2018 but will become compulsory for all members from 1 July 2018.
“…an AFSL Member’s Life Insurance APL must contain the choice of 3 or more life insurance providers”
The standard stated, “The FSC supports principles of competitive access and choice for all advisers and their clients to available life insurance products. In practice this means that an AFSL Member’s Life Insurance APL must contain the choice of 3 or more life insurance providers.”
FSC members will also be required to offer strong off-APL process to allow advisers to meet best interest duty obligations and to disclose to advice clients, and will also be required to make a decision for an off-APL request within seven business days.
The FSC stated that the finalised standard went further than previous drafts which did not mandate a minimum number of insurers or how an APL should be constructed (see: FSC Releases Draft Standard for APLs).
The new standard will also require that the number of products and providers on a life insurance APL is disclosed to consumers as part of the advice process and recorded in client file notes.
Additionally, the inclusion of providers on an APL will need to have a reasonable basis and the formulation of a list will also consider best interest duty