Australia: Move to encourage big FIs to widen approved product lists deemed inadequate
Source: Asia Insurance Review | May 2017
The Financial Services Council (FSC), which represents the A$44 billion (US$33 billion) life insurance industry, has proposed rules that would encourage large financial institutions to broaden the number of products on their approved product lists (APLs), often used to limit the number of products owned by rivals that their financial advisers can sell to customers.
For instance, advisers at Westpac’s BT Financial Advice have access to just one insurer on their APL – the company’s own Westpac Life. Commonwealth Bank holds its junior advisers to a list of just three — CommInsure, TAL and Asteron – and National Australia Bank allows advisers to only recommend two insurers. ANZ has a master list of nine insurers on its APLs, revealed The Weekend Australian.
Draft proposals did not follow Trowbridge's report recommendation on APL
However, the long-awaited action from the FSC on the controversial issue has failed to impress companies trying to break the big banks’ hold on the advice market. The draft proposals would impose only two key requirements on companies. First, to require an undefined range of insurers be added to lists and that companies allow processes for “off APL recommendations”.
The FSC said the creation of APLs would be required “to have a reasonable basis and to be formulated with the best interest duty in mind”, but the best practices principles would be “not mandatory”.
Mr Simon Swanson, MD of start-up life insurance company ClearView, said the proposals shunned the federal government’s Trowbridge report recommendation that lists should include at least half of all life insurers. A