Risk Product, Company and Regulatory Updates as at 3 December 2019
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Product Updates
OnePath terminal medical condition feature broadened to policies outside super
OnePath has improved access to the OneCare Extended Terminal Medical Condition feature. This feature pays the OneCare Life Cover sum insured when the insured person’s death is likely to occur within 24 months because of illness or injury.
Policies held outside super will have access to this feature from the start of December 2019. A supplementary product disclosure statement with this change included has been released.
Aberdeen rolling out ‘bionic’ advice to increase engagement
Global asset manager Aberdeen is deep in talks with a platform provider to offer digital enhancement tools to help advisers service clients. Understanding the engagement issue as a core problem, offering digital ways to engage with clients, spending less time face to face, reduces client sit-down time from 20 hours to two. So much information can be collected digitally, making the two hours much more worthwhile.
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Company Updates
Aviva global restructure
Aviva is splitting itself into five divisions in a global restructure. A new retirement business is being set up. The five business divisions are UK Life, general insurance, Europe Life and Asia Life, with the fifth being a dedicated retirement division focused on investment and savings.
Aviva said it’s building the first holistic savings and retirement solutions business in the United Kingdom, while also exploring options for operations in Vietnam and Indonesia. The restructure will see job losses of around 2,000 staff over three years.
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Regulatory Updates
CommInsure sentenced for hawking (and new gift voucher campaign)
The Colonial Mutual Life Assurance Society Limited (CommInsure) has been convicted of 87 counts of offering to sell insurance products in the course of unlawful, unsolicited phone calls, which is contrary to the Corporations Act (also known as hawking). The insurer, pleading guilty, has been fined $700,000.
In unrelated news, CommInsure is offering two gift vouchers worth $75 to new customers of CommInsure Combined Protection policies. Eligible customers will receive their first gift voucher as soon as possible after the insurance offer is accepted. The second gift voucher is provided just after the first anniversary of the policy.
CommInsure has said that advisers shouldn’t discuss this offer with customers until the product recommendation has been made to the customer and they have accepted the recommendation and agreed to apply for cover. Customers can opt for a gift card for Woolworths, Myer, Dymocks, Ticketmaster or Rebel.
ASIC report on compliance with advice fee disclosure
A new fee disclosure report released by the Australian Securities and Investments Commission (ASIC) discovered consumers receiving financial advice were at risk of getting wrong information regarding fees. Some were being charged fees after ongoing fee arrangements have been terminated.
Thirty randomly sampled Australian financial services licensees and their financial advisers had fee disclosure documentation reviewed. Fee disclosure obligations were introduced as part of the Future of Financial Advice (FOFA) reforms in 2013, with licensees and advisers required to provide clear information on fees to clients. Non-compliance ranged from minor technical breaches to significant breaches. Seven per cent of the documents required to be given to clients legally were not given at all.
Overall, financial disclosure statements fell short of including all the required information about services that a client was entitled to receive (80 per cent were incomplete); 73 per cent of the documents didn’t cover proper information about all the services clients had received, and 44 per cent didn’t include the amount of each fee paid by the client.
APRA intervention on disability income insurance
The Australian Prudential Regulation Authority (APRA) is intervening in the life insurance industry to deal with ongoing losses in the individual disability income insurance market. APRA wrote a letter to the industry announcing new measures to require life insurers and friendly societies to address flawed product design and pricing that are creating an unsustainable market.
Life insurance companies have lost about $3.4 billion over the past five years via the sale of disability income insurance to individuals (rather than via superannuation), with a further loss of $1 billion seen since. APRA is requesting urgent action. There is a real risk that insurers will withdraw completely from the market.
Read a copy of the letter from APRA
APRA consulting on proposed revisions to insurance in super
APRA is proposing changes to the prudential standard that governs insurance inside superannuation. The proposed changes are looking towards improving superannuation member outcomes by making sure the best policies are in place for each member.
The proposed revisions include the ability to easily opt-out of cover, that cover doesn’t erode account balances inappropriately, that the status given to members is fair and reasonable, and independent certification arrangements are in the best interests of members.
The letter outlining the proposed revisions and the draft prudential standard are available at Consultation on Prudential Standard SPS 250 Insurance in Superannuation.
Degrees added to FASEA-approved courses list
The Financial Adviser Standards and Ethics Authority (FASEA) is looking to add new bachelor degrees, bridging courses and graduate diplomas to the approved list of courses in the new draft legislation. The 2019 determination is undergoing public consultation, with all feedback and submissions to be submitted by 7 December 2019.
Approved courses now include:
University of Technology Sydney
Bachelor of Business (Financial Planning major)
Australian Catholic University
Graduate Diploma of Financial Planning
Graduate Diploma of Financial Planning
Master of Finance
Central Queensland University
Master of Financial Planning
Graduate Diploma in Financial Planning
Charles Sturt University
Master of Applied Finance with studies in Financial Planning
Graduate Diploma in Financial Planning
Graduate Diploma in Financial Planning
Deakin University
Graduate Diploma of Financial Services
Graduate Diploma of Financial Planning
Graduate Diploma of Financial Planning
Griffith University
Graduate Diploma of Financial Planning (4181)
Graduate Diploma of Financial Planning (4184)
Graduate Diploma of Financial Planning (4185)
Graduate Diploma of Financial Planning (4186)
Kaplan Higher Education
Graduate Diploma of Applied Finance (Financial Planning major)
Graduate Diploma of Applied Finance (Financial Planning major)
GDFP14 Graduate Diploma in Financial Planning
GDFP19 Graduate Diploma in Financial Planning
Graduate Diploma in Financial Planning (Historical SIA/FINSIA)
Graduate Diploma of Applied Finance and Investment (Historical SIA/FINSIA) – Investment Management Stream
Graduate Diploma of Applied Finance and Investment (Historical SIA/FINSIA) – Investment Management Stream
Graduate Diploma of Applied Finance and Investment (Historical SIA/FINSIA)
Queensland University of Technology
Graduate Diploma in Business (Financial Planning)
Swinburne University of Technology
Graduate Diploma of Financial Planning
University of New England
Graduate Diploma of Financial Planning
University of South Australia
DGFP Graduate Diploma of Financial Planning
XGFP Graduate Diploma of Financial Planning
University of Southern Queensland
Graduate Diploma in Business (Personal Financial Planning)
University of the Sunshine Coast
Graduate Diploma of Financial Planning
Western Sydney University
Graduate Diploma in Financial Planning
Graduate Diploma in Stockbroking and Financial Advising
