ASIC has released a brief update on progress with its much-anticipated review of the impact on the quality of life insurance advice brought about by the implementation of the Life Insurance Framework remuneration reforms.
In a statement dated 22 July 2020, included within an online summary document (Item 7) of the changes to its regulatory work and priorities in response to Covid-19 pandemic, the regulator notes, in relation to its review of life insurance advice reforms, that it has “…delayed collecting the first round of life insurance advice files from advice licensees until the second half of 2020.”
The same updated statement notes that ASIC has also given life companies additional time, because of the pandemic, to respond to its previous six-monthly data collection request, and has delayed its collection of first-half 2020 data until early 2021.
This updated statement released by ASIC last week replaces previous wording contained in its Covid-19 website summary, originally posted in mid-April 2020, that the regulator was deferring its review of life insurance advice as part of the LIF review “…until further notice.”
AFA CEO, Phil Kewin, told Riskinfo that in a meeting it had with ASIC last week, the regulator confirmed the status of its work on the LIF Reform review, saying it was appropriate given the weight of demands on the industry at the moment.
Kewin notes ASIC stressed its revised activity timeframes do not impact the timing of the completion of the final review: “We have been engaging directly with ASIC from an AFA perspective as well as through our work with the Joint Associations Life Insurance Task Force,” said Kewin, who added that the task force provided feedback to ASIC earlier in the year on its data collection methodology, which he says the regulator has taken on board. “We look forward to the next consultation roundtable to be held some time in August,” said Kewin.
Background
In its Insurance submission in response to the life insurance hearings of the 2018 Financial Services Royal Commission (Section 61, page 17), ASIC stated that its post-implementation review of the LIF reforms would take place in 2021 to assess the impact of the reforms.
In the same submission, the regulator noted that, if no significant improvement has been made on the findings reported in the 2014 ASIC Report 413 Review of retail life insurance advice, there would be “…a compelling case to remove the exemption from the ban on conflicted remuneration currently afforded to the sale of life insurance products altogether.”
Different Day, same message.
Has ASIC been taking notice of the devastation that the current regime is causing, not even taking into account the Pandemic.
The current position from an Adviser perspective, is the Industry is in decline and it is becoming too hard to be a Risk adviser and that is based on the environment we live under today.
ASIC appear to be so far removed from reality, that the only solution will be for Government Intervention once the Industry teeters on the edge.
Enjoy your comments, especially now that I have sold my business. The figures say it all. New business premium is on the decline, especially advised. And, group life is on the rise. Long story short – a client who ‘really’ needs $1million lump sum cover will end up limited to a super fund group life unit multiple. Very few will, of their own volition, apply for higher [i.e. underwritten] levels of cover. They will forever be under insured. ASIC and the FSC have dug the grave – it’s just a matter of covering over the remnants of what was once a fully viable and robust advice sector – risk insurance.
I think the “edge” is already here Jeremy Regardless if what they supposedly find in the investigations they will act in a way we will fail to understand ( like usual) as they have no idea of what is really happening and it’s right under their noses. They still think and still will post 2020 that they need to get rid of commissions they are the “ root” of all evil !!! Advisers ( that are left ) can charge a fee ( that no one will pay )
Problem solved ?????????
I hope I am very very wrong but I am predicting a cessation of Commissions in 2021 no matter what they find and that of course is the final nail in the coffin for advised retail life cover as 20,000 advisers leave the industry
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