ClearView says it has lost faith in the Financial Services Council (FSC) developing a set of standards for approved product lists (APLs).

Instead it wants the standards developed by the Australian Securities and Investments Commission, and says they should include all Australian Prudential Regulation Authority-registered life insurers.

In a submission to the Senate Economics References Committee’s scrutiny of advice inquiry, ClearView says its view on the FSC “results from the dominant position taken within the [council] by the large, vertically integrated life insurance industry incumbents that have no motivation to agree to industry practices that remove current anti-competitive practices, or promote competition, innovation or greater choice for consumers”.

“The Trowbridge review recommended APLs should have products from at least half of all life insurers,” the submission says.

ClearView argues this recommendation does not go far enough to remove conflicts of interest or misuse of market power.

“ClearView believes there is strong consumer benefit in APLs for life insurance including all products issued by Australian Prudential Regulation Authority-regulated insurers.”  

The company says it operates an open APL list for its advisers, enabling them to select the best policy to suit the client. But trying to get its life insurance products added to the APLs of large dealer groups has not proved easy.

“We anticipated being able to readily access the financial advise market. However, we significantly underestimated the power of those that ‘approve” dealer group APLs.

“It was so difficult and costly to get on the large dealer group APLs that ClearView had to substantially expand its own dealer group just to get its retail advice product started.”

The submission says ClearView has added its life insurance products to the APLs of non-aligned dealer groups but has failed to achieve any listing with vertically integrated organisations.

“ClearView contends conflicted APLs are more damaging than conflicted remuneration.

“With conflicted remuneration, the customer has a choice of product, but a choice affected by adviser bias.

“A conflicted APL, by definition, effectively deprives the customer and the adviser of choice.

“Open-architecture APLs remove this conflict and give advisers and consumers product choice and access to the most appropriate insurance arrangements.”