Home / Life Insurance / Donít ignore insurance, ASIC warns fundsí advisers
9 December 2019
The corporate regulator is warning superfunds providing scaled advice to members to address members’ insurance needs, after uncovering a number of cases where advisers inappropriately excluded insurance from discussions.
A review of financial advice by 25 superfunds by the Australian Securities and Investments Commission (ASIC) exposed a number of examples where insurance advice was excluded from the advice scope, despite a need for insurance being identified by the adviser.
“If an advice provider identifies insurance as an advice need or relevant to the advice being provided, they must deal adequately with the member’s insurance needs,” ASIC warns.
This includes discussing their existing level of insurance, what they will need in the future, affordability and how to best implement the right insurance strategy, including looking at the costs and benefits of changing insurance arrangements, it says.
“When insurance is excluded from the scope of advice, the advice provider must make it clear to the member that no insurance advice is being provided and explain the potential downside and risks, if any, to the member of choosing not to receive advice on this aspect of their personal circumstances,” the report says.
Advisers that don’t have the expertise to provide insurance advice should refer the member to someone who does.
ASIC says if an adviser cannot act in a member’s best interests because of the limits of the advice model, they should say so and refer the member elsewhere.