Life insurers have responded to an initial Australian Securities and Investments Commission (ASIC) review of the industry’s compliance with design and distribution obligations (DDO) laws as the regulator warns of a tougher enforcement approach, including more sales ban orders. 

ASIC says its review of more than 100 target market determinations (TMDs) for general and life insurance products found problems with the way information has been provided. 

A spokesperson for the Council of Australian Life Insurers (CALI) says the industry is focused on ensuring Australians view life insurance and the industry as accessible, understandable and trusted. 

“Life insurers take current design and distribution obligations very seriously because they are intended to ensure Australian consumers get the type of cover and products that are right for them, when they need it most,” a CALI spokesperson told insuranceNEWS.com.au. 

“There has been extensive work conducted since the introduction of the DDO framework to develop the TMD templates by industry and specific product TMDs. Life insurers understand that they must comply with these obligations, which are strictly regulated by ASIC.” 

The spokesperson says CALI and its members are committed to the ongoing improvement of TMDs to ensure quality outcomes for Australian consumers.  

“CALI welcomes ASIC’s feedback. This new guidance from the regulator will help to inform further work to improve this important disclosure regime and the consumer protections it provides.” 

The current templates are owned and developed by the Financial Services Council (FSC) and CALI expects to take over governance of the templates for the life insurance industry later this year, the spokesperson says.

An FSC spokesperson says the peak body has led compliance efforts with the new DDO regime by developing template target market determinations and data standards for the financial services industry, which have been adopted by life insurers, fund managers and superannuation trustees. 

“As with ASIC’s targeted reviews of DDO compliance over recent months, the FSC welcomes the additional insight and clarity around how the industry can improve its practices to better inform and protect customers,” the spokesperson told insuranceNEWS.com.au. 

“The FSC will liaise with the life insurance industry on whether updates to the FSC’s TMD templates would be appropriate to reflect ASIC’s recent guidance.”