Risk Regulatory Update

OnePath incurs penalties for direct sales insurance practices

OnePath Life is to remediate up to $35 million to over 40,000 customers sold life insurance policies over the phone between 2010 and 2016 using sales practices associated with direct (non-advised) life insurance products. The action comes after Australian Securities and Investments Commission (ASIC) intervention.

Consumers are alleged to have suffered harm from egregious sales practices, including pressure selling tactics, not providing information about key policy exclusions, and leading the customer to believe the salesperson was calling from ANZ Bank with a special customer offer. At the time, OnePath was owned by ANZ Bank, but operating as a separate business.

AFA says APRA, ASIC, using undermining language

The Association of Financial Advisers (AFA) has brought issue with wording in a recent Australian Prudential Regulation Authority (APRA) and ASIC letter to all Registrable Superannuation Entity licensees. The AFA says the wording further undermines the reputation of the financial advice profession.

The letter advised trustees that they were expected to review client Statement of Advice (SOAs), with the following wording:

“Reliance on attestations by financial advisers or advice licensees that services have been provided has limitations due to the potential for conflicts of interest, so cannot in all circumstances be relied upon.”

Phil Anderson from the AFA says the wording undermines the reputation of the financial advice profession, by suggesting that trustees shouldn’t trust financial advisers.

Anderson also believes the trustee review of SOAs is unreasonable and may breach the Privacy Act.

ASIC finalises investigation into AMP FP fee-for-no-service

The investigation into AMP Financial Planning has concluded relating to the allegations of fees-for-no-service arising from its Buyer of Last Resort Policy. No further action will be taken.

ASIC’s adviser reference checking obligations published

ASIC has released its guidelines for running reference checks and sharing information on financial advisers, set to improve reference checking processes in the financial advice and mortgage broking sectors. These are the recommendations from the Banking Royal Commission Recommendations.

From 1 October 2021, the reforms will be in practice with a focus on three key areas: compliance, conduct and risk management. Australian financial services licensees may be required to do a reference check or share information.

Consultation open for hawking reforms for financial products

ASIC is currently consulting on proposed updates to its guidance of a ban of hawking financial products, due to come into force on 5 October 2021. The reforms are to prevent consumers being sold products they don’t want or need. The ban applies to all forms of real-time communication, for first-time unsolicited contact, and now the consent of the consumer must be positive, voluntary and clear.

Feedback is open until 17 August 2021. Final guidance will be published in September 2021.