When asked about the FSC’s commission clawbacks policy by Wealth Professional, ASIC Commissioner Peter Kell said the policy could have been successful if the FSC had gone through with it.
“If it’s successful in helping to deal with problematic churning then that has to be a good thing for the industry as a whole; that has to be a good thing for consumers and for the reputation of advisers in this area.”
Kell said there had been some disturbing cases of churning and inappropriate switching, which left the consumer as the clear loser. “Given that there’s a carve out from the conflicted remuneration provisions under FoFA for life insurance, it is important that the industry looks at how it can insure good behaviour, good conduct and consumer focused behaviour in this area.
The FSC withdrew its churning policy from the Australian Competition and Consumer Commission (ACCC), much to the delight of the AFA and Synchron.
Synchron director Don Trapnell said the move by the FSC to seek class order relief from provisions in the Trade Practices Act in order to implement its anti-churning policy, would have been anti-competitive. “Synchron had already consulted legal counsel in order to rigorously challenge any such application,” he said.