ASIC to take a closer look at churning
The Australian Securities and Investments Commission (ASIC) has identified enough life policy churning in the financial advice industry for the regulator to be concerned about the issue, according to Commissioner Peter Kell.
In an interview with Money Management at the Association of Financial Advisers national conference in Queensland, Kell said the regulator had identified issues across particular firms and instances of churning that have been "more than just one-offs".
During its recent surveillance of several financial advisory practices, ASIC had also witnessed events where consumers had come out behind in "some quite significant ways".
These included clients ending up with less cover or more expensive cover where there had been no improvement in the offering.
"In some cases some claims have ultimately been denied in ways that can frankly be traced back to an inappropriate switch," Kell said.
"Is churning widespread? We see enough of it to be concerned about the issue and to certainly want to do what we can to minimise this sort of activity."
The regulator has expressed interest in the anti-churning framework proposed by the Financial Services Council (FSC), and had already been in talks with the FSC and advisory associations about the proposal.
"We'll be wanting to understand where it ultimately ends up," Kell said. "And ASIC will certainly have some views at the end of the day as to whether the benefits from such a proposal outweigh any sort of downsides that might emerge."
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