The Association of Financial Advisers (AFA) wants the Life Insurance Code of Practice revised to include group life and legacy products.

In a submission to the Parliamentary Joint Committee on Corporations and Financial Services industry review, the AFA says the Financial Services Council (FSC) code’s “most glaring deficiency” is its coverage.

“Because superannuation trustees are not covered by the code, not all life insurance policies will be protected by the code.”

The AFA says other omissions include legacy products, claims subject to legal proceedings, improvements to medical definitions and the requirement to underwrite policies.

The omissions “are not in the interest of consumers and require scrutiny from Parliament to find out why they are necessary. We recommend the committee review the FSC’s code to consider whether the voluntary measures set out are a sufficient commitment from insurers to reform their practices and culture.”

The AFA says the code should acknowledge the fact 50% of life insurance is sold through advisers.

It is also concerned about life insurers self-regulating their distribution practices.

These and the other issues should be addressed when the first code review is undertaken in July 2019.

If the FSC fails in this respect, the AFA wants the committee to consider making the code a statutory measure with parliamentary oversight.

“The future Australian Securities and Investments Commission… review of the Life Insurance Framework must consider the effectiveness of the FSC’s code – also the effectiveness of the FSC to monitor and enforce the code, including the levelling of appropriate sanctions where breaches occur.”