NIBA’s key legal adviser says ASIC’s recent highly critical report on the life insurance industry contains some valuable lessons for the broader industry.
Radford Lawyers Principal Mark Radford says the report reaffirms ASIC’s view of the value of personal advice, given that the current product disclosure regime is widely viewed as ineffective.
Life insurance advisers talk to NIBATV about how the expect the ASIC report in affect the industry. Watch the video above.
“All insurance insurers and insurance brokers, whether general or life, should read this report given the valuable information and guidance it contains for conducting a personal advice business in a professional and compliant manner,” he says.
“The risk for life insurance brokers is that the exception from the monetary conflicted remuneration ban will come under scrutiny given the poor results.
“From a general insurance broker perspective, whilst a number of the issues are life specified, some are universal. It is crucial that similar mistakes are not being made or they too may have their exemption from the conflicted remuneration ban scrutinised. Forewarned is forearmed.”
ASIC has made a number of recommendations for steps for AFS licensees to take, which Radford has summarised as:
- declining to provide advice if they cannot do so in compliance with the best interests duty and related obligations;
- structuring remuneration arrangements so they receive some remuneration from clients for advice where there is no product sale;
- structuring remuneration arrangements to minimise the effect of conflicts of interest and create financial incentives for advisers to meet compliance obligations;
- ensuring they provide appropriate levels of training to improve adviser competence; and
- performing regular file audits.
“The report should be compulsory reading for any insurance adviser given the value that can be obtained from it from a compliance and business perspective,” Radford says.
To view Radford’s assessment of ASIC’s report, click here.