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.