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.
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.”