Pressure is mounting on the Financial Services Council (FSC) to amend its grossly inadequate Life Insurance Approved Product List (APL) standard and require members to offer open APLs, following yesterday’s release of the Parliamentary Joint Committee’s (PJC) Report, according to diversified financial services company, ClearView.
The PJC Life Insurance Report recommended “substantial reform to the way that APLs are currently constructed and used” including a review of shelf space fees and other conflicted remuneration, and the adoption of open APLs – a much higher standard than the FSC which only requires its members to offer a choice of at least three life insurers.
The PJC also observed that the configuration of many APLs potentially breached competition laws and urged the Australian Securities and Investments Commission (ASIC) and the Australian Competition and Consumer Commission (ACCC) to jointly investigate the use of limited APLs by some dealer groups to direct clients into in-house products.
ClearView Managing Director Simon Swanson commended the PJC for a thorough, client-centric report that reflected community standards and expectations.
“It’s clear that there’s strong widespread support for unrestricted APLs that give financial advisers the autonomy to use their knowledge and experience, and exercise their judgement, to recommend the best solution for clients from the 11 or so retail life insurers in the market,” he said.
“If the FSC does not act decisively to amend its standard in line with the PJC report, the government must intervene to foster competition, legislate choice and ensure the best interests of clients are served.”
Mr Swanson also welcomed recommendations to improve disclosure and transparency in Group life insurance including a review of all payments, including any ‘soft dollar’ benefits, between life insurers and trustees and any related party in connection with the provision of default insurance to MySuper members.
