The government should focus on regulating life insurers as opposed to financial advisers, especially since recent scandals in the industry did not involve advisers, argues the Life Insurance Customer Group (LICG).
The group says the LIF reforms are targeting the wrong party, adding that the CommInsure scandal is proof that advisers are not the problem.
“The consumers in this story were disadvantaged by insurers and trustees of the superannuation or employer funds,” it said in a statement.
“Every negative report relates to financial service providers or insurers. Not a single headline was about independent insurance advisers.”
LICG said most of the complaints with the Financial Ombudsman Service (FOS) involve insurers.
“Most life insurance complaints accepted by the Financial Ombudsman Service are about insurers (870 out of 873 in FOS 2014-2015),” it said.
“Who is looking at insurer behaviour? The true scandal in this is our government allowing the FSC, with scandal-perpetrating members who don’t have to answer to any anyone, to control a process for ‘industry reform’.
By targeting the wrong party, the government is allowing the “real perpetrators to get away with profiteering”, the LICG said.
“The consumer loses and poor outcomes continue unchecked. The economic and social wellbeing of all Australians remains compromised because our massive under-insurance problem is ignored.”