Risk Product, Company and Regulatory Updates as at 17 December 2019
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Product Updates
AMP introducing annual advice agreements for ongoing advice
AMP is implementing annual agreements for those clients receiving ongoing financial advice. Ongoing advice agreements are to be phased out for all AMP-aligned and employed advice networks. Arrangements agree explicitly on services and costs. The agreements expire after 12 months.
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Company Updates
MLC Life switched for OnePath by Qantas Super
Qantas Super is now using OnePath as its group insurer from 2020. There are unique concerns involved with insuring workers in the aviation industry, particularly total and permanent disablement and income protection cover for pilots, cabin crew and ground operations staff.
Madison Financial Group rebranding to Sargon Adviser Services
Advice dealer group Madison Financial Group is rebranding to its parent company, Sargon, with the group now to be known as Sargon Adviser Services.
Standford Brown buys World Square FS
Godfrey Pembroke has sold Sydney advice practice, World Square Financial Services, to Stanford Brown. The advisory firm has been an authorised representative of NAB-owned Godfrey Pembroke since 2004 and takes the adviser count of Stanford Brown from 13 to 15.
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Regulatory Updates
ASIC files proceedings against TAL for IP claim handling
TAL Life Limited is to face the Federal Court after alleged breaches of the ASIC Act, the Corporations Act and the Insurance Contracts Act regarding an income protection insurance claim. A referral was made by the Financial Services Royal Commission.
A consumer made a claim under her income protection policy in January 2014 after a diagnosis of a medical condition. Once TAL had obtained the person’s medical history, TAL sent a letter saying the claim was being avoided due to a failure to disclose an unrelated medical history. TAL said she breached her duty of good faith under s13 of the Insurance Contracts Act.
ASIC alleges that TAL has made a decision based on false statements made by TAL in a Claims Pack sent to her. ASIC alleges that TAL avoided the policy without first offering the person an opportunity to address her concerns, and have accused the claimant of breaching her duties. ASIC is seeking civil penalties.
APRA: IOOF acquisition of OnePath Pensions and Investments approved
The Australian Prudential Regulation Authority (APRA) approved the sale of ANZ-owned OnePath Pensions and Investments to IOOF Holdings. The transaction has been in motion for two years and been expensive for ANZ with a price drop from $975 million in October 2017 to a 2019 price of $850 million. The sale is expected to be completed in March 2020.
Westpac update
Over 3,300 Westpac investors have opted to exit the bank’s share placement plan. Westpac had a target of $500 million, however, has raised $770 in investor cash, while also losing $68 million after the AUSTRAC scandal. Over 30 million new shares are to be issued to share placement plan applicants.
APRA has launched an investigation into Westpac for possible breaches of the Banking Act. The conduct relates to allegations by AUSTRAC, as well as how the bank handled the issues once they were identified. Westpac leaders may have to face the music on possible breaches.
APRA has imposed an immediate increase in capital requirements for the bank of $500 million to reflect the increased operational risk profile, taking the total operational risk capital add-ons of Westpac to $1 billion. An extensive review program has been initiated to focus on risk governance at the bank.
New elder abuse register
Governments across Australia have established power of attorney reforms to help prevent financial elder abuse. The Council of Attorneys General is to implement a mandatory national online register of enduring power of attorney documents, with more provisions in the pipeline. The register is to ensure enduring power of attorney documents are legitimate and current.
The register will help banking staff check power of attorney status to avoid unauthorised transactions based on potential abusers bringing in outdated power of attorney documents.
ASIC banning life insurance cold calling
The Australian Securities and Investments Commission (ASIC) has announced a ban on cold calling sales call for direct life insurance and consumer credit insurance. The ban is set to address poor practices that have led to unfair outcomes for consumers, in effect from 13 January 2020.
