The Life Insurance Customer Group (LICG), which mainly comprises risk-focused advisers, has questioned why the Financial Services Council (FSC) has not taken more decisive action to address questionable and/or unethical behaviours by some of its member organisations, which have been exposed in recent public scandals.
In an open letter sent by the LICG in late April to FSC Chief Executive Sally Loane and the FSC Board, the Group highlighted what it sees as the absence of any public censure for FSC member group, CommInsure, following Fairfax/ABC media reports.
The letter says the Group’s adviser members were being tainted, by association, by these and other media reports in recent years of failures in the ethical behaviour of institutions:
“…none of the reported claimants with claims denied by CommInsure had the benefit of support by advisers.”
“As advisers who consider it a privilege to act on behalf of our clients at the time of claim, we note also that there has been no attempt by the FSC to clarify for the public that none of the reported claimants with claims denied by CommInsure had the benefit of support by advisers. Those insured persons attained their cover under ‘group’ distribution.”
The independent adviser group also questioned the capacity of the FSC to develop and enforce a new Code of Practice, stating there has been no public censure for the unethical behaviours of its members.
The LICG told riskinfo that it had not received a formal response to its letter. When contacted by riskinfo, an FSC spokesperson said the development of the soon-to-be-released Code of Practice was a transparent process that was being undertaken after dozens of stakeholder meetings with consumer groups, the Federal Government and Opposition, regulators and financial advisers.
The spokesperson also noted the FSC had addressed the issue of CommInsure at its annual Life Insurance Conference in mid-March when Loane made a public statement on the matter:
“Our industry takes these issues and this examination by Parliament and the regulator extremely seriously. People have been let down and trust has been damaged. I deeply regret this has happened,” Loane stated at the Conference.
She continued, “Many of our members have moved quickly to instigate their own internal reviews, particularly into denied claims and policy definitions. CommInsure has embarked on a number of initiatives including establishing an independent review panel for complex declined claims, more regular reviews of medical definitions so that they reflect evolving medical standards, and an independent investigation into ethical concerns.”