Kell gets personal in AFA speech

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ASIC deputy commissioner Peter Kell chose to focus on one particular advice firm and their failings, in his speech to the AFA conference yesterday.

Addressing the audience, Kell said that ASIC was particularly concerned about the life insurance industry, and used AAA Financial Intelligence as a “particularly bad example”.

Kell listed the multiple failures that ASIC found when investigating AAAFI, and said that 80% involved inappropriate risk advice.

“In summary, what we found was inappropriate conflicted advice that caused real, meaningful harm to the consumer, and it was just in relation to risk advice. It’s not limited to that licensee, although that was a particularly poor example,” he said.

As a result of the findings, Kell said ASIC would undertake a surveillance project of the risk advice area. He said that the aim of the project was to “better understand industry practise and also assess whether policies are being sold appropriately and whether clients are receiving advice that’s in their best interest”.

“That’s a project that is now underway and our focus will be personal advice in relation to retail life policies… We have served notices on various insurers whose products are being distributed through personal clients, to gather information at this stage…”

ASIC will be gathering information about policy types with a focus on distribution channel, operation models, division types, and so on, said Kell. “This work will then be followed by major surveillance on retail life insurance advice.”

Kell said that ASIC will also work on bringing risk advice and lessons learnt to the forefront of its communications, when it has been a key factor in enforcement actions.

  • James Smith on 15/10/2013 9:24:22 AM

    Yet again ASIC focus on an example of one company's shortcomings and extrapolate concern across the industry. Would have though it would be productive for ASIC to also spend time researching good risk advice practises and use this as a guide to evaluate the appropriateness of trends towards on line needs analysis and TV advertising that encourages on the spot sales rather than considered dialogue with a financial planner. Seems like ASIC are focused on potential planner indiscretions but turning a blind eye to institutional strategies that have similar adverse consequences.

  • alleycat on 15/10/2013 9:50:24 AM

    Mr Kell,
    here's a good idea, why don't you investigate the insurance Company's who accepted this advice company's business with the knowledge that they were accepting business based on what you call "inappropriate advice".
    Rather than tarnish the whole industry, every life company knows who the chronic recyclers are through their lapse ratios !!

  • Mark Thompson on 15/10/2013 9:54:05 AM

    I'd like to see ASIC look at Insurance Companies that fail to deliver in areas of claims, rather than just rely on the disputes system that exists now.

  • Tony on 15/10/2013 10:45:51 AM

    James perfect statement and 100% correct, looks like ASIC still havent woken up

  • Rod on 15/10/2013 3:05:19 PM

    With respect does Mr Kell, do you ever read the comments posted here !!

    People i think sadly you are wasting your tim, majority of people in these roles have never been at the coal face of the industry

  • Paul Risk Adviser. on 16/10/2013 11:04:23 AM

    This is more bad press for Good Advisers, it seems people in this industry are fooled about who's interests Asic and the government is working for, I'll give you a hint it's not the consumers and is most definitely not the Advisers.
    Are these planner organisations like AFA set up for planners or the insurance companies? I know who has more money to tip into their organisations.
    I could give 5 other areas Asic should be particularly concerned about, however seemed to have dropped them now.
    My Audit this year as a risk adviser has never been more in depth and the requirements for a competent pass mark were much more strict, doesn't this show they have already made changes? Why now all this Attention and bad press? Because the Insurance companies are telling the same story for the last 3 years that they are losing money/Profits! Asic are doing this for the Agenda of the Insurance companies.
    I think the industry forgets that as an Independent Adviser, I don't work for a Bank (I quite that because of corruption and total greed of the peoples wealth) I don't work for an Insurance company, I don't work for my dealer group or Asic, I Work for My CLIENT and as long as I can save them money on their premiums whilst adding extra benefits and providing better insurance strategies I'll Switch them all day long... Wouldn't the Insurance companies love not to have a middle man around to Navigate the Rabbit Warren which is the Insurance Market.
    I can tell you which side my clients will be on and I can say right now that the Banks and Insurance companies and Asic and the Government need to get on the same side before it's too late.....

  • PETER CORRIE on 16/10/2013 4:45:44 PM

    Shadow Shopping and Surveillance is a disgraceful activity by ASIC, not only that it is deceitful and underhand but it undermines our whole industry and creates mistrust amongst consumers. It is the sort of thing you would expect in Russia not in a free enterprise democratic country.
    The churn issue is not the function of a bureaucracy like ASIC ,it is instead and always has been a Life Insurance company management problem. ASIC will have wasted an enormous amount of time and our time for little result.
    ASIC instead should be concentrating on convicting corporate and individual criminals not interfering in the marketplace and chasing paper trails.
    The ironic and interesting part of all this is that the Lawyers and Bureaucrats at ASIC would not survive as Financial advisers and their knowledge of appropriate advice is only based on theories.
    THE Labor party started all these practices so we need political pressure on the Liberal party to stop this activity once and for all otherwise we will be subjected to more and more unjustified interference. The only alternative for the industry or advisers is to take Legal action.
    Next sunday I will be asking the question of Bronwyn Bishop my Federal Member what the Liberal party can do to stop these harmful ASIC activities.

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