The Australian Financial Services Licensing (AFSL) system is confusing, flawed and encourages “the blame game”, according to FPA board member and long-time adviser Julie Matheson.
Ms Matheson says the AFSL system is to blame for product failures within the industry.
“The licensing system permits the bundling up of products and services under third-party licensees so that no one really understands who’s responsible,” she told Risk Adviser.
“Consumers don’t know who to turn to, and who is ultimately responsible for flawed and faulty insurance products in the system.
“The licensing system encourages confusion and the blame game, and is an untrustworthy system.”
Ms Matheson’s comments come following Senator John Williams’ calls for a life insurance inquiry.
She said the best system for the industry would include true-to-label products and agents, underpinned by ethics and transparency.
“If a consumer wants insurance products, they should go to an insurance company or see a professional insurance broker or agent,” the FPA board member said.
“The insurance company would be responsible for their products and the agents who recommend them, not a third-party licensee like the current system.
“The provider of the product should be regulated to stand by their product, and make sure their agents are properly trained to professional standards.”
Ms Matheson recently ran as an independent candidate for the Senate at this year’s federal election, representing Western Australia.
At the time of publication, she has 1,171 first preference votes, the most votes of any WA candidate not grouped under a ticket, according to the Australian Electoral Commission website.