How many more inquiries and reports do we need into financial advice before there’s some action which truly benefits consumers?
The latest litany of shame, amidst an ongoing number of parliamentary inquiries, was regulator Australian Securities and Investments Commission’s (ASIC) expose on life insurance.
This cosy corner of the advice industry, which features commissions of up to 100% of the first year’s premiums, was found very wanting with 37% of consumer’s in the project not being given advice to the legal standard.
ASIC also found a correlation between high up-front commissions, which are not covered by the Future of Financial Advice rules and hence flourishing, and costly premiums consumers could not afford.
FoFA does however impose an obligation for advisers to act in the best interests of the consumer, although there is some hair splitting on this, and the ASIC research shows far too often this is not the case.
The industry says there’s still too much non and under insurance when it comes to life cover which is why it pays healthy commissions to advisers to sell their products.
However when consumers can’t be confident about the independence of the advice of this complex series of products, including life insurance, TPD and income protection it’s little surprise they stay away from the market.
ASIC says the life industry, which includes advisers and insurers, is on notice to clean up their act but their response so far seems to be a call for a cross-industry working group to be established.
Yes more reports and more delay before there’s any action. But we consumers can demand changes from our politicians and the ways we deal with these markets.
Perhaps a consumer boycott of any life insurance sold with a commission of more than a reasonable amount?
We'll keep attuned to developments in this space....