The Financial Services Council (FSC) has abandoned its policy on “churning” of policies after encountering considerable opposition from the life insurance industry.

It had planned to take the policy to the Australian Competition and Consumer Commission for approval, but this has now been dropped.

The life insurance industry argued churning is a minor problem, and insuranceNEWS.com.au understands the number of advisers churning policies is as few as 10 a year.

Most life insurance industry CEOs spoken to by insuranceNEWS.com.au say there are more important issues to deal with, such as implementing the Future of Financial Advice regulations and the ongoing problem of persuading people to take out life insurance.

Specialist life dealer groups also welcomed the news, having publicly criticised the FSC’s draft policy since it was announced in 2011.

Synchron director Don Trapnell says the move was “common sense prevailing” and that the FSC policy didn’t stack up.

“The FSC simply could not provide the statistical evidence that supported [the view] that a systemic culture of ‘churning’ existed among advisers,” he said.