The AFA has called for clarity around reports on the quality of advice and the level of churning after conflicting messages have sent by ASIC in recent weeks.
In a statement to members, AFA Chief Executive Phil Kewin said members had received “…conflicting messages with respect to ASIC’s view on the state of the life insurance advice sector”.
Kewin referred to statements made by ASIC at a hearing of the Parliamentary Joint Committee (PJC) Inquiry into Life Insurance and written responses to Questions on Notice to the same inquiry.
“The first report referenced statements by ASIC suggesting that the number of advisers suspected of “churning” was less than 50,” Kewin said, adding “…a later report referenced statements by ASIC that recent surveillance has reflected similar rates of non-compliant life insurance advice to those reported in ASIC Report 413.”
Kewin said the report had generated concern among AFA members and “…the first report suggested that there is not much of a problem, whilst the second report suggested that nothing has improved” prompting the AFA to seek clarification from ASIC and the office of the Minister for Financial Services, Kelly O’Dwyer.
“We want to emphasise that we are still…seeing some problematic advice around life insurance in the surveillance that we undertake…”
ASIC sought to clarify its comments to the PJC around churn during a hearing of the House of Representatives Standing Committee on Economics last week. At that time, ASIC Deputy Chair, Peter Kell said earlier reports that only 50 advisers may be involved with churning were inaccurate.
At the hearing, Kell said as part of the life insurance reforms ASIC was now able to collect data about advisers with high life insurance lapse rates which it could use to identify high risk advisers who were inappropriately switching customer policies.
Kell added that as part of the initial data received by ASIC, it had identified around 500 advisers with potential issues around higher levels of lapse rates and had narrowed that group down to a smaller pool for its first round of in-depth surveillance.
“I think some of the media articles suggested that that means it’s only those people who are possibly causing problems. We want to emphasise that we are still, unfortunately, seeing some problematic advice around life insurance in the surveillance that we undertake. It’s not limited just to that smaller target group that has come up through our first data-gathering exercise,” Kell said.
How far have we come. Discussions, committees, reports, inquiries, calls for more of the same and still no clarity on what a churn is as opposed to best interest, what a lapse is. Conflicting opinions and despite all of the gaggle of geese involved, not a single clear approach with findings that are factual as opposed to having an agenda to drive. Remarkable. Is this the “profession” we ought aspire to although we ignore the fact that an IFA’s business is worth less after January 1st 2018, under insurance will become an even bigger problem and our associations FPA AFA will largely sit on their hands and let insurers use government to drive legislation that will drive the consumer into the ground at claim time (despite scandals) and IFA’s compromised in business for the greater good of profits for insurers. So this is our industry……really ?
alistsir, This is all unfortunately to be expected, with industry bodies, govt employees and politicians purely and simply wanting to make themselves relevant in a situation that doesn’t need them and justify their jobs. If the damn life companies had kicked the known troublemakers and churners out decades ago NONE of this would be an issue now and our once-great industry would be moving from strength to strength as we speak. Even though I’m out mid-2023 (after 33 years) I still feel strongly for those colleagues left behind and the new advisers that will inherit this absolute mess and ‘soon to be zero commissions’ universe caused by self interested govt and industry entities. Don’t kid yourself, zero commissions are the backstop weapons to remove all the risk advisers that are stubborn enough to remain post-2024. Life companies want us GONE and this is the most powerful way to achieve that end. between the clueless govt employees and the anti-adviser attitude of the life companies our days are numbered. Our life industry was strong and proud once . . .now . . .too sad for words . . .
The Minister and the ASIC keep pushing the IFA community off the cliff on a monthly basis.
Like the poor Coyote, we crash into the boulder ledge, then they push us again and we land heavily. Not happy with the lack of comedic value, they once again push us off the next ledge and the fall gets harder.
The current Minister would have by now been fired by Peter Costello.
I’m sooooo tiered.
Or is that tired…see we are all worn out.
Till there is a level playing field, ASIC is unable to offer any solution. The adviser is only trying to protect his INCOME. The DEALERSHIPS are not loosing as they still get the DEALER FEES. So lets get this right. Stop product suppliers going direct to our clients and offering CHEAPER costs. Cut out Dealers living of the advisers, share the profits.
I am starting to gain more respect for the AFA and Phil appears to be on the right track, by questioning ASIC on their contradictory data and also asking for better clarity around their assumptions.
Please produce the data ASIC as with past BS reports and blatant Institutionsl backing, ASIC simply can’t be trusted.
Provide the clear data to back your comment she ASIC.
And the whole fact that LIF was implimented without and before gathering CHURN data confirms it’s a complete FSC / Institutional con job.
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