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ASIC Bans Risk Adviser Based on Lapse Data Research

A West Australian adviser has become the first person to be banned from providing advice as a result of ASIC Life Insurance Lapse Data Project (LILD Project) after receiving a five year ban for failing to act in the best interests of clients when providing life insurance advice.

The regulator banned Perth-based Philip Leake after it examined a number of his client files from Wealthsure Financial Services, where he was an authorised representative from March 2015 until January 2018.

ASIC found that Leake had not considered the circumstances of his clients and what life insurance they may need, nor their ability to pay for the cover recommended, and stated he had failed to make a reasonable assessment of which life insurance products might be best suited to his clients’ needs.

It was also found that Leake made false and misleading statements in his SoA by claiming to have considered his clients’ circumstances in relation to the waiting periods for income protection policies, when he had not actually done so.

The ban is the second enforcement action stemming from ASIC’s LILD Project, which was established in August 2016, and uses reports from life insurers that list advisers who have met specific thresholds relating to lapsed policies, allowing ASIC to target its surveillance activity and review the quality of advice.

In January 2018, ASIC named the first adviser to face enforcement under LILD Project with former authorised representative of GuardianFP, Duane Wright becoming subject to an enforceable undertaking requiring further training and licencee supervision on any advice provided (see: ASIC Takes First Action Against Adviser Based on Lapse Data).

  • XY

    “in August 2016, and uses reports from life insurers that list advisers who have met specific thresholds relating to lapsed policies, allowing ASIC to target its surveillance activity and review the quality of advice.”

    So what exactly was the point of LIF is ASIC can monitor this quite easily through data! What a joke/failure.

  • BKY

    How is it determined what one can and can’t afford? If you ask a client, who has no idea about the value of insurance cover, what they can afford, you will obtain a very different answer from that client after you have gone through the education process. What are Adviser’s supposed to do…are we to start “telling” people to cut back on their lifestyle? One of the problems is that the regulators have people that don’t believe in life risk insurance like a true risky does. A true risky believes that something could happen to their clients at anytime…what’s the old saying…”you don’t know what’s around the corner”.

  • BKY

    On further thought regarding the 20% lapse rate…let’s say you have a few old clients who no longer need the cover and at the same time you have a death claim on another old client. In addition, you are also reviewing a few clients and conclude that it’s in their “Best Interest” to switch a few clients to another provider for various and obvious reasons, then all of this could add up to 20% “Lapse Rate”…then what? You end up on some watch list…then out of the blue a few files are requested and ASIC needs further evidence to support their well known position…well you complete the rest…Am I simply “jumping-at-shadows”???…I guess time will tell but time has already run out for some advisers. At this rate in addition to the education standards there is not going to be anyone left and Bill Shorten and his Union buddies will have achieved what they wanted. Good luck to all