Risk Product, Company and Regulatory Updates as at 11 February 2020

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Product Updates

FPA partners with Deakin University, launches pro bono support for bushfires

Deakin Business School has partnered with the Financial Planning Association of Australia (FPA) to offer financial advisers a Masters of Financial Planning with its Certified Financial Planning (CFP) program. Units 1-4 of the CFP certification are set to go towards the Masters’ units.

Members will soon be able to volunteer their time to help those affected by bushfires, with pro bono financial advice. Any advisers interested should contact the FPA via probono@fpa.com.au. Affected members can access FPA Wellbeing for free, confidential support.

AMP adds insurers to MyNorth platform

AIA Australia and TAL have been added to the MyNorth wrap platform as an insurance offering for advisers and clients. Advisers and superannuation and pension clients of MyNorth, North, Summit, ipac iAccess and Generations can now access the insurance offerings.

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Company Updates

OneVue takes over Madison Financial Group

After Sargon entered external administration owing money for the purchase of OneVue’s Diversa, OneVue is now attempting to recoup around $31 million in owed money. OneVue has appointed receivers for SC Australia Holdings, with one of the assets of SC Australia Holdings being Madison Financial Group. Madison itself is not subject to any proceedings and business is unaffected. Madison was bought by Sargon in 2018, due for a rebrand in March 2020 to Sargon Adviser Services, which will no longer go ahead.

ClearView halts agreed value IP policies

Income protection products at ClearView that sit under the agreed value system are being disbanded as of April 2020 due to slow sales in the life insurance business. A new indemnity-type IP product is being launched to offer lower maximum monthly benefits.

Algorithms and artificial intelligence collide with ‘bionic’ advice

HUB24 and Aberdeen Standard Investments (ASI) have joined forces to launch ‘bionic’ advice tools. While robo-advice relies on algorithms, so-called bionic advice tools are fully customisable, using input from clients and the adviser to create outcomes using both algorithms and artificial intelligence. The advice tools are designed to reduce face time with an adviser, with the idea to drop the hours of work involved. A typical plan could be cut from 20 hours to produce to just two, with a subsequent reduction in fees.

Regulatory Updates

New class action launched against AMP over adviser actions

Shine Lawyers are looking into a new class action against AMP Life, AMP Financial Planning and two related subsidiaries, Charter Financial Planning and Hillross Financial Services, relating to breaches by its financial advisers regarding fiduciary and statutory duties of around 100,000 clients.

Shine Lawyers alleges AMP failed to act in its clients best interests with the sale of in-house life insurance products set at inflated prices, resulting in a lack of objective financial advice being offered. It is alleged that the advisers of these firms received commissions and incentives for recommending the in-house products, despite better deals being available. A financial disadvantage is alleged to have been the result.

The class action is open to any customers who obtained an AMP Flexible Lifetime Policy (death, total and permanent disability, trauma, income protection and business protection insurance) from 2013 from AMP Financial Planning, Charter Financial Planning or Hillross Financial Services.

ASIC update on financial advice-related misconduct and compensation

  • Six of the largest financial institutions paid or offered almost $750 million in compensation to customers who suffered loss or detriment due to fee-for-no-service or non-complaint advisers

  • AMP, ANZ, CBA, Macquarie, NAB and Westpac undertook the review and remediation programs after two major Australian Securities and Investments Commission (ASIC) reviews

Class action launched against CFS

Shine Lawyers have filed a class action against Colonial First State with allegations that CFS put members into policies with CommInsure, which were not in the best interests of superannuation members. Cheaper policies were available with other providers. The result is alleged to have been lower superannuation balances, with the fees removed from member accounts as part of their membership.

Westpac facing class action over money laundering

A United States’-based law firm, Rosen Law, has filed a class action against Westpac on behalf of shareholders who purchased shares between 11 November 2015 and 19 November 2019. The bank’s former CEO Brian Hartzer and current CEO Peter King were named as defendants. The allegations include that the defendants made false or misleading statements and failed to disclose issues when they became aware of them.

One such instance is cited as being the company failing to disclose 19.5 million international funds transfer instructions to AUSTRAC, the money laundering and terrorism financing regulator. The claim is seeking recovery of unspecified damages. Westpac has said it will defend the claims. Westpac is currently facing 23 million alleged breaches of anti-money laundering and counter-terrorism laws with AUSTRAC.