The Parliamentary Joint Committee examining the life insurance industry has handed down a unanimous final report recommending random audits of financial advisers and the adoption of open approved products lists across the sector.
Amongst a raft of recommendations, the report called for ASIC to conduct random audits of 20 per cent of life insurance advisers over a three year period and publish any findings of misconduct on its Financial Advice Registers. Advisers that had been reviewed would also be required to publish the outcome of a review on their own website in a highly visible location.
…the report called for ASIC to conduct random audits of 20 per cent of life insurance advisers over a three year period…
Misconduct statistics for licensees and life insurers would also be published by ASIC with the Committee stating in the report that it “…endorses the view put forward by the Chairman of ASIC that creating a sufficient deterrent for misconduct in the financial services sector requires both significant penalties and a reasonable prospect of being caught”.
A further recommendation inside the retail life insurance area called for a balance of ‘affiliated and non-affiliated’ products on APLs and where “…affiliated products are recommended, the affiliation should be disclosed, and the customer should be given a comparison with non-affiliated products”.
Additionally, the committee also recommended a transition to open APLs while also calling for ASIC and APRA to jointly investigate if the past use of APLs had breached any anti-competition laws administered by the two regulators.
Alongside this recommendation the Report also called for ASIC to conduct a systematic review of all payments and benefits that pass between participants in the direct, group and retail insurance sectors with the intention of finding any regulatory gaps that should be examined further by the Government.
In making this recommendation the PJC stated rules had been introduced to ban conflicted remuneration “…however, evidence to the committee, particularly from ASIC, indicates that a plethora of hidden payments including commissions, fees, performance-related payments, soft dollar benefits, and nonfinancial benefits still exist within the various structures of the life insurance industry”.
“…evidence to the committee…indicates that a plethora of hidden payments… still exist”
Other recommendations made by the PJC in the report include:
- Regularly updated medical definitions that align with current medical knowledge and research
- Standardised medical definitions across all types of policies
- Industry standards for claim time-frames and limits on the number of medical examinations
- A mandatory and enforceable Code of Practice in relation to mental health life insurance claims
- Consumer protections for life insurance aligned with consumer protections for other financial services and products
- ASIC and APRA to audit superannuation trustees to identify any payments, including ‘soft-dollar’ benefits between life insurers and trustees related to providing group life cover
The final report does not contain any recommendations for changes to the Life Insurance Framework reforms (see: Inside the Mind of the PJC) and as stated by Senator John Williams during the initial hearings of the Committee (see: PJC Review Will Not Tackle LIF Reforms).
In the Foreword to the report, Committee Chair, Steve Irons, MP, said the PJC’s work focussed on areas where substantial changes were required to ensure the life insurance industry was held to account in the following areas:
- Consumer protections and industry codes of practice
- Transparent remuneration, commissions, payments and fees
- The provision of advice in the best interests of consumers
- Group life insurance arrangements that do not disadvantage certain groups of consumers
- Appropriate access to personal medical and genetic information
- Fair claims handling practices
Click here for a full copy of the report.
If ASIC and the PJC still feel, after all the cap’s on income, extremely over the top education requirements, longer responsibility periods and just plain nightmare that they and the Government have put Risk Insurance Specialists through the last 2-4 years that there are still advisers out there doing the wrong thing – then prove it and name them!
I’m just fed up with the constant accusational finger being pointed at me everyday by these clowns!
No matter what I and other risk insurance advisers do, we’re all still crooks in their eyes.
I may as well have deliberately done the wrong thing all these years, actually made some money (‘cos I’m not any more!!!) and just chucked it in for good.
I AM JUST SO ANGRY AT THESE DAMNED CONSTANT INSINUATIONS!!!!
What next??????
The funny thing is that by trying to comply with BID that changing insurance somewhat a crime. These idiots don’t know what we actually do. Do what I did.. write to your local MP
I did – and I also sat down with him.
When I got to the point in our conversation about how the data ASIC obtained was handpicked and flawed, he stopped me and asked me to put what I was telling him in a letter that he could then present to Kelly O’Dwyer.
When she got my concerns, she eventually replied with some form letter that was so condescending and rambled on about the greater good, that I never bothered to even read it all. It was just deplorable so I just deleted it.
It showed me the Federal Minister for Financial Service and ASIC aren’t interested in the truth. They’re only interested in smoke and mirrors and handing some blanket legislation down that gives the impression to the media and the public that ‘they did something’ to weed out the very small minority of advisers out there that have screwed it up for us honest, hardworking advisers that actually cared about their clients.
Where is the AFA in all this !?? Not a peep out of them
Talk about useless in the heat of battle
Great at running road shows and giving awards how about if real help when it’s needed
Furthermore….I work from home (by choice) and occasionally have the radio on in the background while I work. Why is that all I hear every day are insurance and financial product advertisements that ask for no information from its customers yet constantly promise the world for basically nothing.
Here I am, asking my clients for every piece of information I can possibly glean from them to make sure the advice I give them is right, then spend hours researching the right solution and even more hours putting a Statement of Advice together that’s become so complex and onerous now that even I’m confused by it what its trying to state – to have ASIC and the PJC tell me day after day that I’m dishonest and conflicted. To hell with you lot!
You have no clue what we do and I’d put my life on it that you’re more conflicted with your daily activities than I and 90% of advisers out there are! I’m just fed up with your accusations!
Can’t wait to read the report… looking forward to seeing what the committee has to say in regard to industry super, tv offers. Obviously they set benchmark for quality products.
Also, how industry fund financial planners act in BID for clients increasing insurance.
I’m sure that the report is accurate and balanced!
“Amongst a raft of recommendations, the report called for ASIC to conduct random audits of 20 per cent of life insurance advisers over a three year period and publish any findings of misconduct on its Financial Advice Registers and also force advisers to publish any reviews they receive on their own websites.”
Will ASIC allow us to publish reviews that show that our advice is excellent after an ASIC review?
While ASIC is at it how about they automatically randomly audit, Real Estate agents, Mortgage brokers, Financial Planners, Accountants setting up SMSF’s etc etc to catch all the dodgy people in those industries? Why just Risk Insurance advisers?
Like “Where’s the Integrity’s” comments below, when is enough, enough? This once great industry has lost the plot. we already do ongoing audits with our licensees to ensure that our advice meets all regulatory requirements.
It is all becoming way to difficult with increasing claw-back periods, increasing education requirements and now automatic ASIC audits to want to remain in this industry.
I’m not making money anymore now that I have all these ridiculous hurdles to jump through. It takes me hours upon hours to now do what I used to professionally and competently do in minutes. When I write a policy, its designed to lead to a successful claim. Of the 20-odd claims I’ve had in my 10-years, only 2 were declined. One of those was caused by blatant non-disclosure, the other by a person who’d retired at 64 but wanted to claim on her TPD Any Occupation policy for mental illness where there simply wasn’t sufficient time to assess the claim before it expired.
Where have I done anything wrong by any of my clients ASIC?????
The PJC Report does not make a distinction between positive/negative reviews, and the wording of the relevant part of the recommendation is as follows: “Advisers that have been reviewed must also publish the outcome on their website in a highly visible location”.
The story has been updated to reflect that statement from the report.
And if you choose not to maintain an adviser website ?
How about as well as the big stick approach, that a positive reinforcement process is adopted as well as this? Awards for ‘best practice’ or ‘best adviser’ for consistently good advice, for example. Great advice legitimately helps people, but instead of focussing on this, it seems our lawmakers are just looking at ways to punish people and hoping for a better response. Long term, negative reinforcement does not work, so while I agree that punishment to genuine offenders is necessary, it should be looked at as a part of the process, not to be used as the entire process.
FOS data confirmed least area of complaints was life insurance based matters as opposed to the majority in Gi and FP areas. Does ASIC, APRA & PJC even know that FOS exists? If they did, why focus on life insurance advisers where there’s the LEAST complaints?
And you know what Alan….that’s exactly how I feel!!!
I have no faith that ASIC have the integrity or lack of conflicted agenda they’re accusing us of and the PJC’s recommendations are unworkable without them causing incredible cost to the industry – at both the consumers level and advisers level.
This is an out of control wrecking ball that’s destroying everything in its path.
“however, evidence to the committee, particularly from ASIC, indicates that a plethora of hidden payments including commissions, fees, performance-related payments, soft dollar benefits, and nonfinancial benefits still exist within the various structures of the life insurance industry”.
What a load of bollocks! If it exists name and shame who is getting anything! Show us your “evidence” ASIC, and while your about it, show us your KPI’s and if you have actually achieved anything other than demonising the Life industry as the lapdogs of the union/ industry funds.
Agree wholeheartedly emkay. There’s definitely a different set of rules for ASIC than there now is for advisers.
And just like the data they obtained for Report 413, you can bet your life on it that the insignificant amount of data they obtained was handpicked and manipulated to validate the already desired result.
This is very clearly an organisation with a predetermined motive to funnel as much future business to the industry superfunds as they can and have no credibility or integrity in what they purport to be at all.
The focus areas stated by the MP Steve Irons are clearly being ignored in every other area of our industry, they have once again taken a narrow perspective. If any of these politicians read the comments here alone they would be educated far beyond anything they have been told so far.
How does ASIC and the PJC’s justify the expense to Treasury to waste Taxpayers dollars to investigate an industry that has almost no complaints to FOS?
We are led by grubby corrupt individuals that need to be investigated. Where is the ACCC in all this?
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