The Australian Securities and Investments Commission is conducting a review of life insurance advice and plans to consult with the industry on scaled advice this year.
Speaking at the Association of Financial Advisers Conference, ASIC senior executive leader, financial advisers Kate Metz revealed work has commenced its review of advice in life insurance in 2017 despite delays from COVID-19.
"We have already started on that work, but we have now served notices on about 130 licensees that is calling for 2017 advice files. In most cases we have asked licensees for one or two files," she said.
Metz said the regulator is looking to see if the advice provided complies with the best interests duty and related obligations.
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"We're looking to see what position consumers have been placed into as a result of getting the advice. We will be doing the same process again for 2021 advice," she said.
Metz stressed that it is unlikely that ASIC will be taking any enforcement action as a result of the review.
"We're not looking to catch people out, this is a review in the ordinary course for us," she said.
Furthermore, ASIC is urging financial advisers to make financial advice more accessible, affordable and 'bite-sized' to meet consumer demand.
The regulator will be releasing a consultation paper later in the year to understand the impediments advisers face in providing affordable limited advice.
The consultation comes as ASIC undertook work to hear what consumers wanted from advisers, furthering work undertaken in 2010 on access to advice issues.
"ASIC has given guidance in the past that we support limited or scaled advice but we are hearing from licensees that they don't want their advisers in that space," she said.
Metz said there is nothing in the law stopping advisers from offering scaled advice but thinks there is a misapprehension that the corporate regulator will crack down on them.
"It's for egregious misconduct, the vast majority of financial advisers do the right thing. We want advisers to use their professional judgement and service their clients in a reasonable way," she said.
Metz said ASIC is actively looking at ways it can better communicate with industry participants whether that be in a video, podcast or by providing checklists or with more examples of short statements of advice.
"I think it is a matter of the regulators working all together and I recognise there is more that ASIC can do," she said.
"We are open to suggestions but certainly we don't want to continue with the status quo where people feel unable to provide limited advice or trapped into providing lengthy documents where, honestly, a consumer is never going to read."