AFA demands more from FSC on insurance code
The Financial Services Council (FSC) needs to make substantial improvements to its draft Life Insurer Code of Practice in circumstances where it does not adequately make commitments to consumers and the advice profession, according to the Association of Financial Advisers (AFA).
The AFA chief executive, Brad Fox said the FSC should move to improve the Code even if it meant delaying implementation beyond the announced implementation date of 1 October 2016.
Responding to the draft Code issued by the FSC, the AFA said it needed to include commitments to consumers and the financial advice profession, because approximately 50 per cent of Australia's life insurance is arranged through the expert advice and [with] the support of financial advisers.
"The commitments to consumers contained in the Code are insufficient to drive cultural change, while the role of the life insurance financial advice profession has been ignored," Fox said.
"Restricting the Code to setting out best practice standards for insurers in relation to underwriting and claims management does not go far enough in addressing the cultural issues and sales practices that work against consumer interests," he said.
"The Code needs to also impact the organisational behaviours that unreasonably conflict an adviser in their Best Interests Duty and induce inappropriate replacement advice. This means the Code must contain commitments to advice professionals as well as to consumers."
He said the AFA had been calling for the Code since November 2014, but the current draft would not win back the social licence lost by insurers through recent claims and other issues.
The AFA submission proposes 29 recommendations and is further supported by more than six pages of verbatim comments, concerns and suggestions from AFA Members.
"The draft Code needs substantial improvements before it can deliver on its promise," Fox said.
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