A parliamentary committee has recommended that the Australian Securities and Investments Commission (ASIC) conduct random audits of 20% of life insurance advisers over a three year period.
Where misconduct is identified, appropriate entries should be recorded on the financial advisers register, and statistics on licensees and insurers should be published, so the public can be informed, says the Parliamentary Joint Committee (PJC) on Corporations and Financial Services in its report on the life insurance industry.
Advisers that have been reviewed must also publish the outcome on their website in a highly visible location. If necessary ASIC should be provided with additional funding to allow these random audits to occur.
Among other recommendations, the PJC also suggests that the ASIC conduct a systematic review and risk assessment of all payments and benefits flowing between participants in each sector of the life insurance industry—direct, group, and retail—and inform the government of any regulatory gaps; and the government consider further regulation of payments between life insurance industry participants following the ASIC review.
At the same time, the PJC recommends that ASIC and APRA immediately undertake an audit of all superannuation trustees to identify the nature, purpose and value of all payments, including any 'soft-dollar' benefits that occur between life insurers and trustees or any related parties in connection with the provision of default insurance to members of MySuper (an Australian government superannuation initiative to provide low-cost and simple super products for employers to choose as their default super fund) and choice superannuation products, including:
- current and historical payments made by life insurers to trustees or any related parties and/or by trustees to life insurers under profit-sharing, premium adjustment models, experience share arrangements or any arrangement of a similar nature;
- the total premium value attributable to the existence of profit-sharing, premium adjustment models, experience share arrangements or any arrangement of a similar nature between a trustee and a life insurer; and
- payments, including any 'soft-dollar' benefits made or that may become payable by life insurers to trustees or any related parties of trustees for any purpose, for example, subsidisation of administration costs, technology, marketing, sponsorship, hospitality, staff expenses etc.