{"id":10186,"date":"2011-04-27T11:12:15","date_gmt":"2011-04-27T01:12:15","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=10186"},"modified":"2021-04-15T10:15:26","modified_gmt":"2021-04-15T00:15:26","slug":"churning-on-the-way-out","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2011\/04\/27\/churning-on-the-way-out\/","title":{"rendered":"Churning on the Way Out?"},"content":{"rendered":"<p style=\"text-align: center\"><a href=\"https:\/\/riskinfo.com.au\/polls\/the-future-of-churning\" target=\"_self\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1228             aligncenter\" style=\"border: 0px\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2009\/05\/vote-now.jpg\" alt=\"Vote Now!\" width=\"108\" height=\"47\" \/><\/a><\/p>\n<p style=\"text-align: left\">Recent industry speculation suggests\u00a0the practice of churning life insurance policies is set to\u00a0become a thing of the past.\u00a0 But what is the opinion of advisers on this issue?<\/p>\n<p>Our latest riskinfo poll asks:<\/p>\n<p><!--more--><\/p>\n<p><em><strong>Will the introduction of\u00a0&#8216;Client Best Interest&#8217; legislation have a significant impact on reducing churning?<\/strong><\/em><\/p>\n<p>&#8216;Client Best Interest&#8217; legislation will be part of the soon-to-be announced FoFA reforms, which will enshrine into law the requirement that the financial adviser act in the best interests of their client.\u00a0 (This part of FoFA was previously described as the &#8216;Fiduciary Duty&#8217; reform proposal.)<\/p>\n<p>The argument is that if the adviser will be\u00a0required by statute to act in the best interests of their client, they will be breaking the law, post FoFA, if they ever churn a life contract (churning being the practice of moving life policies between insurers for the purpose of obtaining higher levels of remuneration without a sufficient reason to cancel the existing policy).<\/p>\n<p>While the logic of this argument is sound, there already exists a\u00a0contention that current Financial Services Reform provisions make churning\u00a0extremely difficult to achieve\u00a0due to the requirement that all product recommendations and reasons be included within\u00a0Statements of Advice.<\/p>\n<p>Yet it is widely acknowledged that churning still takes place in significant numbers, meaning current regulations have not had the desired effect on stamping out this practice.<\/p>\n<p>If this is the case, will the introduction of &#8216;Client Best Interest&#8217; rules under FoFA make that much of an impact on the minority of advisers who are tempted to\u00a0practice churning?<\/p>\n<p>We acknowledge that it is difficult to determine the exact level of churning that currently takes place, as there are differing views as to what actually constitutes churning, combined with\u00a0the fact that there are usually very sound reasons why advisers update their clients&#8217; life policies, such as\u00a0product enhancements and innovations or changed client circumstances that make different policies more appropriate.<\/p>\n<p>What is your view?\u00a0 In a post FoFA advice environment, will the practice of churning continue?\u00a0 Who is responsible &#8211; the adviser, the dealer, the insurer or the regulator?\u00a0 Let us know what you think&#8230;<\/p>\n<p style=\"text-align: center\"><a href=\"https:\/\/riskinfo.com.au\/polls\/the-future-of-churning\" target=\"_self\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-1228           aligncenter\" style=\"border: 0px\" src=\"https:\/\/riskinfo.com.au\/news\/files\/2009\/05\/vote-now.jpg\" alt=\"Vote Now!\" width=\"108\" height=\"47\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Recent industry speculation suggests\u00a0the practice of churning life insurance policies is set to\u00a0become a thing of the past.\u00a0 But what is the opinion of advisers on this issue? Our latest riskinfo poll asks:<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3,49],"tags":[],"class_list":["post-10186","post","type-post","status-publish","format-standard","category-general","category-polls"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/10186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=10186"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/10186\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=10186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=10186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=10186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}