Suncorp says meeting the best interests duty requirements in the draft Future of Financial Advice (FOFA) bill would mean higher costs when providing general insurance advice.

Its submission on the FOFA bill, obtained by insuranceNEWS.com.au, says the general insurance industry has found the advice provisions of the Corporations Act to be onerous and costly.

“The provision of personal advice within our business is only viable in the unique operating environment of our niche brands, Shannons and Apia,” Suncorp said in its submission.

“We feel that aspects of the draft FOFA legislation stand to reduce the viability of providing personal advice within our niche brands and worsen the business case for further implementation of personal advice models across our business.”

Suncorp says the wording in the bill requiring a broker or adviser to provide information on another subject matter wouldn’t be practical.

“Our call centre consultants are frequently asked for advice regarding insurance products that they do not issue,” the submission said.

“This duty indicates that consultants would be required to issue a written notice advising the client to seek advice elsewhere.”

Suncorp says general insurers already have an exemption in the Corporations Act from providing written statements for most products, and the FOFA bill is now introducing a new process for its business.

“The frequency of these requests would result in a significant business expense without any clear consumer benefit,” it said.

Suncorp argues consumers come to its various insurance brands only to seek advice on the products offered and it is unreasonable to expect the insurer to know all the details of its rivals’ products.

“We feel that this obligation would make it impractical to provide any personal advice to customers who are comparing our insurance products to that of our competitors,” it said.  

“Regrettably we expect that these aspects of the proposed legislation, left unaltered, will ultimately result in Suncorp ceasing all personal advice offered through our Apia and Shannons brands.”

The insurer is recommending general insurance products be granted the same exemptions as banking products from the reforms.

“The explanatory memorandum for FOFA notes basic banking products are granted a lower best interest standard due to these products being widely understood by the consumer and advice on these products poses a low risk of consumer detriment,” it said.

“We believe general insurance products are also widely understood by the consumer and should be treated the same way.  

“Suncorp cannot see any reason to change the treatment of general insurance products under FOFA reforms.”