ClearView has lambasted the FSC’s life insurance approved product list draft standard, saying it displays contempt for the government, financial advisers and consumers.
ClearView says the FSC draft standard released yesterday does not provide guidance on how broad that “range” should be, and mirrors the current situation where large institutionally-owned licensees can use their discretion to enforce extremely narrow and restrictive APLs.
The draft also ignores the contentious issue of shelf space fees and shuns the Trowbridge report’s recommendation that APLs should include at least half of all life insurers, the firm said in a statement.
ClearView also said the draft imposes only two key requirements on Australian Financial Services (AFS) licensees – to apply a reasonable basis to APL construction with a “range” of insurers and to have a process for “off-APL recommendations”.
ClearView managing director Simon Swanson said the draft standard confirms that the industry cannot self-regulate and will achieve nothing in terms of increasing competition, choice and customer best interest, describing the draft as a ‘Yes Minister’ document.
“Despite being charged by the government 18 months ago to develop a new APL standard for the delivery of greater product choice and accessibility for advisers, the FSC has produced a superficial document that will fail to stamp out anti-competitive practices by the large vertically-integrated institutions and, therefore, won’t lead to profound, lasting change and a better deal for consumers,” Mr Swanson said.
“Open APLs are essential if advisers are to provide objective advice in the client’s best interest. However, the FSC’s dependent relationship with the dominant, vertically-integrated players means that there will be no meaningful progress in the absence of regulatory action.”
ClearView said it will continue to petition the government for mandated open life insurance APLs for all licensees, and is currently preparing a formal submission in response to the FSC draft standard.