The “churn” debate has been back in the spotlight this week, but our comment of the week looks at the issue from a different angle.
In Wednesday’s article, financial services lawyer Claire Wivell Plater discussed the new approach that ASIC is taking to fight churn.
According to Wivell Plater, even if recommendations to replace a policy are appropriate, there is still a high risk that the adviser’s disclosure won’t be adequate – if ASIC’s March 2012 shadow shopping study of retirement advice is any guide.
“Innocent Observer” responded to the article from an angle that they believe hasn’t been taken yet:
“You know who the one party that seems to keep getting left out of the "churn" conversation is?
I'm a client to nearly every product I use. And call it what you will, but if someone can offer me a better deal (be it a better product, features or cost), AND they are able to do the bulk of the legwork to get me switched over, then the chances are I'll switch to their product. I'm not stupid. I can make decisions. And you know what, I really don't give a stuff how much commission they're getting. Now does that make ME part of the problem, or the guy who is presenting me with (what I and presumably he) considers to be a better option/product???
If "churn" is such a problem, slap early termination fee on the policy like you would get on your phone plan (etc etc...).”
Thanks to “Innocent Observer” for broadening the discussion, and to everyone else who shared their thoughts.