iExtend Holdings and its subsidiary iExi have entered into a court enforceable undertaking with the corporate regulator after the businesses were found to have provided life insurance services without an Australian financial services (AFS) licence. 

The court enforceable undertaking with the Australian Securities and Investments Commission (ASIC) requires iExtend to apply for an AFS licence to issue financial products, to provide general advice and to provide claims handling and settling services. 

The enforceable undertaking is an alternative to ASIC commencing court proceedings. 

“Firms dealing in financial products have a legal obligation to be licensed,” ASIC Deputy Chair Sarah Court said. 

“The licensing regime requires financial services businesses to meet important disclosure, design and distribution obligations. 

“ASIC has taken this action to ensure that iExtend’s customers are afforded the same protections as for the rest of the industry.” 

The regulator commenced investigations in June last year as it had reason to suspect, amongst other things, that the businesses operated without an AFS licence, according to details in the court enforceable undertaking. 

ASIC said its investigation found that iExtend was offering to pay people’s life insurance premiums in exchange for a portion of the benefit if a claim is made. 

“To give effect to this arrangement, iExtend acquired interests in life insurance policies by entering into a co-ownership deed with policyholders,” ASIC said. 

Issuance of co-ownership deeds to policyholders is considered by ASIC as a financial product, one of a number of ASIC concerns listed in the court enforceable undertaking. 

ASIC is also concerned that iExtend was providing information to policyholders that is general advice and that it may at some time in the future be providing a claims handling and settling service. 

Under the terms of the enforceable undertaking, the business will not enter into any co-ownership deeds until it is granted an AFS licence or has otherwise obtained ASIC’s “express” written approval to do so. 

iExtend launched last year, offering a “co-ownership” option for life policyholders who want to cancel their policies. Under this arrangement, iExtend co-owns the life policy and pays all the ongoing premium on the co-owned portion of the policy, and shares a proportion of total life claim benefits with the nominated beneficiaries or the estate of the policy owner. 

The business says the co-ownership option is only available through financial advisers, who have made the recommendation to their clients. 

In a separate announcement, iExtend says Kevin Goss has been appointed to the Advisory Board. 

Mr Goss was most recently MLC Life Insurance National Manager Debt Protection and Partnerships. Before MLC, he was Head of Adviser Distribution Retail Advice at CommInsure. 

“We are delighted Kevin joins our Advisory Board, adding further bench strength to our existing Advisory Board members who offer incredible industry insight and bring years of industry experience to the iExtend proposition and to understanding how it fits into a regulated market,” CEO David Sarkis said. 

Click here for more from the court enforceable undertaking.