The Australian Securities and Investments Commission (ASIC) last week temporarily banned the sale of a life insurance product for the first time, using its design and distribution obligations (DDO) powers that commenced in October 2021. 

ASIC issued an interim stop order on two income protection covers from Clearview Life Assurance, citing deficiencies in the target market determinations (TMDs). 

The regulator says it has concerns that the TMD failed to consider the impact of key eligibility criteria on the suitability of the product for certain classes of consumers.  

ASIC is also worried that the TMDs do not specify any meaningful distribution conditions to ensure that products would likely be distributed to consumers in the target market and likely exclude distribution to consumers in the negative target market. 

The 21-day stop orders have since been lifted after ClearView responded to ASIC’s concerns. 

“ClearView took swift action to address ASIC’s concerns with revised TMDs,” a company spokesperson says. 

The spokesperson says the products – Clearview ClearChoice Income Protection Cover and Accidental Income Protection Cover – are distributed through general advice only. 

“ClearView products distributed where personal advice is given are not impacted,” the spokesperson says. 

The stop order action against Clearview was announced on the same day that ASIC revealed it has written to life and general insurers about their DDO compliance gaps. 

Under the DDO regime every financial product must have an accompanying public TMD statement setting out in sufficient detail that the product is appropriate for the target market and that the distribution conditions appropriately direct distribution of the product to that market. 

ASIC says its review of more than 100 TMDs found compliance weaknesses and warned more stop orders are being considered.