ASIC points to insurer comparison site selling its owner’s products
At least one life insurance company owns a life insurance comparison website through which it distributes at least some of its products direct to consumers, according to the Australian Securities and Investment Commission (ASIC).
What is more, the regulator has pointed to the possibility of consumers being misled if they are not aware that the products being promoted on the website are actually issued by the owner of the website.
Answering questions on notice from the Parliamentary Joint Committee on Corporations and Financial Services, the regulator reinforced its concerns about vertical integration noting, “Because of their structure, vertically integrated entities face inherent conflicts of interest”.
Then, dealing with question of direct insurance sales, the ASIC answer noted that it was “aware of at least one business model where a life insurer owns a life insurance comparison website”.
“The comparison website distributes some life insurance direct to consumers without personal advice,” it said. “Generally, the comparison website directs the consumer to the life insurer to complete the sale. In this case, the distribution costs are represented by the insurer's costs in operating the website.”
“There may be a risk that the consumer may be misled if they are not aware that some of the products promoted on the website are issued by the owner of the website,” the answer said.
ASIC said that it had issued a regulatory guide (RG 234) which provided guidance about disclosing any connections to the providers of the products that were being compared (eg common ownership) to help ensure that consumers were not misled about the influence of the connection on the product promotion.
AUTHOR
Mike Taylor
Recommended for you
An adviser has received a written reprimand from the Financial Services and Credit Panel after failing to meet his CPD requirements, the panel’s first action since June.
AMP has reported a 61 per cent rise in inflows to its platform, with net cash flow passing $1 billion for the quarter, but superannuation fell back into outflows.
Those large AFSLs are among the groups experiencing the most adviser growth, indicating they are ready to expand following a period of transition and stabilisation after the Hayne royal commission.
The industry can expect to see more partnerships in the retirement income space in the future, enabling firms to progress their innovation, according to a panel.
