The Association of Financial Advisers says it wants to help address problems flagged in the Australian Securities and Investments Commission’s (ASIC) scathing report on life insurance – but unless the regulator names the failing advisers or dealer groups there is little it can do.

“We have to play a leading role in changing the culture of advice in those planners ASIC has deemed a failure,” CEO Brad Fox told the association’s conference in Cairns yesterday.

“We have asked ASIC how we can help to fix the problems, because our role is influencing that culture of advice. But we don’t have the data to go and do that.”

Mr Fox says the regulator’s report is a “targeted piece of research”, focusing on 70 advisers and 220 client files.

“It found 40% of advice failed the law, so it will be hard to take the high ground with that result. But one issue of the report is the advice was only judged on what was in the client’s file.

“The adviser should have documented everything in the file and, as a result, in some cases the missing information has resulted in a fail.”

He says advisers must get into the habit of documenting all discussions with their clients to avoid compliance issues.

Asteron EGM Jordan Hawke told the conference life insurers must help address issues raised in the ASIC report.   

“We have to look at how we develop products to win business, but with the consumer in mind,” he said. “Consumer behaviour has changed and practices such as stepped premiums are challenging for the [life] business.”

Mr Hawke says there is growing support for hybrid upfront commissions, but there is also an opportunity to explore new payment models.

“I can see the opportunity to create a new model, but the manufacturer’s goal of a client holding the product for eight years is not going to solve the problem,” he said.

“I can see a time when companies will develop a true wholesale product that will have 0% commission. We need to think about the cost to service clients.”

Mr Hawke says further cost savings can be made through tele-underwriting, to reduce reworking of paperwork between insurers and the advisers.

“We have got to take the complexity out of the business,” he told the conference.