Risk Product, Company and Regulatory Updates as at 4 November 2019
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Company Updates
LGIAsuper partners with Link Advice for planning services
An agreement has been reached between Link Advice and LGIAsuper for in-house phone-based financial advice services at the $12 billion superannuation fund. Super fund members will now be able to access financial advice in and out of regular business hours and anywhere in Australia with the new service.
Link Advice can offer a broader range of advice than the fund could, specifically contributions, portfolio investment choices, insurance options, retirement transition, retirement advice and retirement health checks.
CommInsure sale complete
Commonwealth Bank is now free of CommInsure, its life insurance business, after the sale to AIA Australia was completed. CommInsure cost $500 million and took two years to negotiate. A 25-year joint cooperation agreement is in place.
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Regulatory Updates
ASIC takes RI Advice to task over rogue adviser
A Federal Court action has been filed by ASIC against RI Advice and a former financial adviser who was a case study in the Royal Commission. ASIC alleges that RI Advice didn’t take reasonable steps to ensure the former financial adviser, John Doyle, was providing appropriate financial advice to clients or acting in their best interests.
Doyle worked for the group as a financial adviser from 2013-2016 and is alleged to have been providing ‘cookie cutter’ advice to retail clients. Some of these clients were in preparations for retirement. Advice was given to invest in complex structured products without taking client goals or risk tolerance into account. Doyle received upfront and ongoing commissions for his clients’ investments in these products.
ASIC alleges that RI Advice was aware, or should have been aware, that there was a risk that Doyle was not complying with his legal obligations. RI Advice faces up to $1 million in penalties, and Doyle faces civil penalties of up to $200,000 per contravention.
In the case study at the Royal Commission, it was revealed that Doyle had a terrible track record at RI Advice, including failing the competency exam, complaints and very poor audit results. Action was extremely slow to be taken.
ASIC takes NAB companies to court
The Australian Securities and Investments Commission (ASIC) has commenced proceedings against NULIS Nominees (Australia) Limited and MLC Nominees Pty Ltd in relation to fees charged by both entities for services that were not provided to super fund members.
It is alleged that NULIS and MLC Nominees (the current and former superannuation trustee of NAB) misled members of MLC MasterKey Super products. ASIC is also alleging that NULIS and MLC Nominees took around $33 million Plan Service Fees from 220,000 members of MLC MasterKey Business and MLC MasterKey Personal Super who did not have a plan adviser.
NAB also deducted about $67 million in plan service fees from 300,000 members of the MLC MasterKey Personal Super where plan advisers were not required to provide services and members didn’t receive any services they could not otherwise receive for free.
Lobbyist financial advisers’ association has 4,000 members
The United Financial Advisers Association (UFAA) is going strong with over 4000 members since launch just a few months ago. The Life Insurance Customer Group (LICG) was formed by volunteers as the industry faced many changes and challenges with the Future of Financial Advice (FOFA) and the new Life Insurance Framework (LIF).
LICG originally had over 3,000 members, with the organisation lobbying for the life insurance industry. The UFAA is the new incarnation of the LICG. The UFAA is not designed to work in competition with existing adviser associations, but to work alongside them as a lobbyist for policy - rather than focusing on other issues such as adviser education.
