![\"\"](\"https:\/\/riskinfo.com.au\/news\/files\/2013\/08\/Peter-Kell-2.jpg\")
<\/a>Speaking at the FSC\u2019s National Conference in Brisbane this week, ASIC\u2019s Deputy Chairman, Peter Kell<\/strong>, confirmed the regulator would be undertaking a major, risk-based surveillance of life insurance advice during the 2013-14 financial year.<\/p>\n Mr Kell said the review will investigate whether advisers are acting in the best interests of their clients when advising them to switch life insurance policies. He said ASIC understood that, in many cases, switching occurred because there was a meaningfully better policy available, or because the client\u2019s situation or objectives had changed.<\/p>\n … we will be focusing on areas where we see what looks to be straight-out \u2018churn\u2019<\/p><\/blockquote>\n \u201cBut we will be focusing on areas where we see what looks to be straight-out \u2018churn\u2019 \u2013 that is, excessive switching between policies that doesn\u2019t leave the client any better off, and that is motivated purely by the adviser\u2019s financial interests,\u201d the Deputy Chairman said.<\/p>\n \u201cIt goes without saying that the mis-selling of life insurance doesn\u2019t help build trust, and inappropriate advice, and inappropriate switching \u2013 \u2018insurance churn\u2019 \u2013 undermines consumer confidence.\u201d<\/p>\n Mr Kell said there were a number of reasons for undertaking the review, including the fact that the regulator viewed insurance advice as a very important area for consumers.<\/p>\n \u201cThe second is that we\u2019ve publicly said for some time that we would be more likely to focus on life insurance advice in the absence of an industry framework. That\u2019s yet to be put in place, so we are delivering on what we said we would do.<\/p>\n \u201cThe third reason is that we\u2019ve seen some poor practices in some of our recent surveillances,\u201d he said.<\/p>\n According to Mr Kell, there were numerous cases of inappropriate advice or mis-selling of life insurance, and that the practice was not limited to the occasional, individual rogue. \u201cThere are, in some firms, systemic problems,\u201d he said.<\/p>\n In addition, the fact that retail advice is exempt from the ban on conflicted remuneration under the Future of Financial Advice (FoFA) reforms is also a key consideration for ASIC.<\/p>\n … we do not want to see a situation where some advisers may churn clients to replace other commissions<\/p><\/blockquote>\n \u201cWhat we do not want to see is a situation to arise whereby some advisers may churn clients to replace other commissions that are no longer permitted. This would help no-one, including the vast majority of reputable advisers,\u201d Mr Kell explained.<\/p>\n In closing his presentation, Mr Kell said: \u201cAs part of this work, we\u2019ll be talking with insurance companies, with advice firms, and industry groups, to understand how the industry is travelling, how the work that the industry itself is doing on life insurance is going, and what we can do to support that.<\/p>\n “We want to understand emerging issues about this industry \u2013 how products are being developed and distributed \u2013 and that includes an understanding both of how advisers are being remunerated but also an understanding of how direct channels are evolving.\u201d<\/p>\n ASIC plans to release its report on insurance advice next year.<\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Advisers who fail to comply with the best interests duty when recommending a client switches their insurance policy will be the focus of regulatory action over the next 12 months, the Australian Securities and Investments Commission (ASIC) has confirmed.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,241,270],"tags":[],"class_list":["post-22159","post","type-post","status-publish","format-standard","category-compliance-regulation","category-conferences-and-events","category-remuneration","headers-new"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/22159","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\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=22159"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/22159\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=22159"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=22159"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=22159"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}