{"id":27682,"date":"2014-10-09T19:03:38","date_gmt":"2014-10-09T08:03:38","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=27682"},"modified":"2014-10-13T19:06:43","modified_gmt":"2014-10-13T08:06:43","slug":"afa-fsc-to-jointly-address-asic-report","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2014\/10\/09\/afa-fsc-to-jointly-address-asic-report\/","title":{"rendered":"AFA, FSC to Jointly Address ASIC Report"},"content":{"rendered":"

Representatives of both the advice and product segments of the life insurance sector will band together to address the issues raised by the Australian Securities and Investments Commission (ASIC) report into life insurance advice.<\/span><\/p>\n

<\/p>\n

\"Outgoing<\/a>
Outgoing FSC CEO, John Brogden<\/figcaption><\/figure>\n

The Association of Financial Advisers (AFA) and the Financial Services Council (FSC) have announced they will jointly convene a working group to address retail life insurance product structures and distribution practices. The announcement follows the release of a report from ASIC, which found there was an \u2018unacceptable level of failure in the life insurance advice sector (see: ASIC Life Insurance Advice Review<\/a>).<\/p>\n

The FSC said the working group would examine the findings in the report and consult with the regulators and Parliament on its solutions.<\/p>\n

Among the issues raised by the ASIC report was the impact of upfront commissions on personal life insurance advice. According to the report, 96% of the life insurance advice that was not compliant with the relevant advice laws was given by advisers paid under upfront commission models.<\/p>\n

Outgoing FSC CEO, John Brogden<\/strong>, said it was critical that remuneration models in the life insurance industry remain sustainable and practical for consumers and the industry.<\/p>\n

\u201cThe ASIC report requires a serious response from the industry.<\/p>\n

\u201cThe financial advice and life insurance sectors will work together to carefully examine the findings and recommendations in the ASIC report and to assess all options to improve market practices and sustainability,\u201d Mr Brogden said.<\/p>\n

\"AFA<\/a>
AFA CEO, Brad Fox<\/figcaption><\/figure>\n

AFA CEO, Brad Fox<\/strong>, said any report of this nature and magnitude needed to be comprehensively reviewed and analysed.<\/p>\n

\u201cThe majority of our members provide life insurance recommendations as a part of their service to clients.<\/p>\n

\u201cTherefore, it is vitally important for our members, and for their clients, that we consider all available options at the product, licensee, adviser and consumer levels to address the issues raised in the report and to ensure that consumers retain their trust in life insurance. It is important to remember that the majority of Australians do not have sufficient life and income protection insurance.\u201d<\/p>\n

He said it would be the AFA\u2019s role, as part of the working group, to ensure insurers took the results seriously.<\/p>\n

Too often we see broader problems being put at the feet of advisers<\/h6>\n

\u201cToo often we see broader problems being put at the feet of advisers. There\u2019s clearly \u2013 in terms of the evidence ASIC has put on the table \u2013 a need to face into this. But there\u2019s a bit to be answered for in terms of the insurers and product manufacturers as well.\u201d<\/p>\n

Mr Fox added that ASIC had not released the specific details of any licensees and representatives it had identified as delivering non-compliant advice, but that the Association was keen to work with individuals and groups to improve advice quality.<\/p>\n

\u201cIf there\u2019s a problem, then let\u2019s get out there and fix it. The worst thing would be if we were told there was a problem but not where it is. Because that prevents us from doing anything positive to effect change. Our role is influencing the culture\u2026 We asked ASIC a whole range of questions to try and identify a cohort of advisers where these problems are occurring; there doesn\u2019t seem to be that degree of data for us to do that. Which is a bit frustrating, because it means that all the other advisers who are doing a great job are going to wear some of the burden of this from a reporting sense.<\/p>\n

\u201cIf it\u2019s an adviser of ours and they\u2019re failing our code of ethics, then we need to deal with that too. It would be better to be on the front foot, and to be proactive, than on the reactive back foot when it is made known to the wider public.\u201d<\/p>\n

However, Mr Fox did praise ASIC for providing detail about the types of advice that resulted in a non-compliant rating.<\/p>\n

The issues of product design, distribution and embedded product commissions should be looked at by the product manufacturing sector<\/h6>\n

\u201cWhat is very useful about the way ASIC gave us the report is that there are examples of what failed. But just as importantly there are examples of what passed, and some gaps about best practice.<\/p>\n

\u201cIf I look at the upside of the report, there are some really good learnings to take from this around the need for all advisers to keep striving to deliver great advice each time they meet with a client.\u201d<\/p>\n

\"Mark<\/a>
Mark Rantall, FPA CEO<\/figcaption><\/figure>\n

Meanwhile, the Financial Planning Association (FPA) said it was happy to work with other advice associations to improve the quality of life insurance advice, but would not involve itself in discussions about product manufacturing.<\/p>\n

\u201cThe issues of product design, distribution and embedded product commissions should be looked at by the product manufacturing sector as noted in the recommendations of the report,\u201d FPA CEO, Mark Rantall<\/strong>, said.<\/p>\n

Mr Rantall added that while the FPA was not sure whether any of its members were involved in the instances of poor or uncompliant advice outlined in the report, it would take action where breaches of the FPA\u2019s Code of Professional Practice were identified.<\/p>\n

\u201cFPA members are bound by a Code of Professional Practice and as a professional association, the FPA is a firm advocate for higher professional and education standards\u2026<\/p>\n

\u201cAny FPA member found to breach <the relevant rules within the Code> will be subject to the FPA disciplinary process. The FPA has a Life Risk Specialisation, however its disciplinary records show negligible complaints, less than one per year since 2009, made against FPA members relating to life insurance advice,\u201d Mr Rantall said.<\/p>\n","protected":false},"excerpt":{"rendered":"

Representatives of both the advice and product segments of the life insurance sector will band together to address the issues raised by the Australian Securities and Investments Commission (ASIC) report into life insurance advice.<\/p>\n","protected":false},"author":7,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[282,8,270,248],"tags":[],"class_list":["post-27682","post","type-post","status-publish","format-standard","category-associations","category-compliance-regulation","category-remuneration","category-training"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/27682","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\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=27682"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/27682\/revisions"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=27682"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=27682"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=27682"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}