MLC Life calls for insurers to offer personal advice

MLC Life said it welcomes the government’s commitment to implement the majority of the Quality of Advice Review’s (QAR) recommendations but also wants to be able to provide personal advice.

“We’re pleased to see the Albanese government delivering better financial outcomes for Australians, with clear reform to make financial advice more accessible and the intention to allow members of superannuation funds to access advice on an affordable basis through their fund,” said Kent Griffin, chief executive of MLC Life Insurance.

“But more can be done to look after those that need access to affordable, simple advice.

“Australia’s superannuation system is world-class, in providing consistent wealth creation to working Australians while providing them a default base cover of insurance, and the government’s announcement to allow super funds to provide advice to their members is a terrific step in the right direction.

“The same notion that would see super funds provide customer service so their members have access to personalised information to make the right choice for their circumstances, is also true for Australia’s life insurers.”

Speaking on an ifa webcast, Financial Advice Association Australia (FAAA) CEO Sarah Abood said Financial Services Minister Stephen Jones is allowing superannuation funds to expand their role in financial advice as a “trial run” to essentially test the waters.

“When we listen to the minister, when we hear the way those recommendations are being promoted and talked about, it’s very much that this [is] allowing people who are not financial advisers to give advice to people that that would be a big change and I think in the minister’s head, he is thinking let’s do a trial run with the super funds,” Ms Abood said.

“Let’s see how it works in super funds and if we iron any kinks out of it, we can, with more confidence, extend it more broadly.”

More recently, she said talk has shifted to whether life insurers “might be the next cab off the rank”.

“In both cases, it’s because there is an existing duty at law to preference the interests of clients or members,” Ms Abood said.

“For insurers, it’s the duty of upmost good faith, for trustees, it’s prioritise the interests of members.”

MLC Life said that millions of Australians are unable to speak to their insurers about their personal circumstances to ensure they have the right coverage.

Michael Rogers, chief individual insurance officer for MLC Life Insurance, said: “Australians are asking pretty basic questions, all ultimately seeking appropriate coverage that’s affordable and accessible, and it is virtually impossible to help if we can’t provide simple advice to our customers that suits their personal circumstances.

“Every day, customers contact us for help as they seek to ensure they have the most appropriate cover at an affordable price. In instances where the customer no longer has an adviser, the current advice rules mean we’re simply not allowed to assist them,” Mr Rogers said.

“This isn’t about making sure more people have more insurance, we want to make sure our customers have insurance that’s affordable, accessible and appropriate.

“From a consumer protection perspective, most people believe they are seeking basic customer service and the Quality of Advice Review clearly identified that the current situation doesn’t provide enough choice for Australian consumers who are seeking simple insurance advice that isn’t comprehensive.”

In most cases, Mr Rogers said, customers are looking for guidance about their coverage in the face of changing life circumstances, such as the birth of a child, purchase of a home, or a change in their employment.

“For many Australians a financial adviser is an important investment, but for some they are simply looking to check their coverage or review their policy,” said Mr Rogers.

Mr Griffin added: “Like super funds, insurers are governed by an obligation to act in the interests of our customers, including section 13 of the Insurance Contracts Act of 1984, which imposes a statutory duty of utmost good faith on life insurers, and has been interpreted by the courts as requiring the insurer to look to the interests of the policy holder.”

He pointed out that the provision allows for damages as well as imposing penalties for breaches.

“These obligations are in addition to the many consumer protection and conduct obligations by which life insurers are currently restricted to operate only in the interests of customers and potential customers,” said Mr Griffin.

He added that this includes the “requirement to operate efficiently, honestly and fairly, anti-hawking requirements, product design and distribution obligations, prohibition on misleading and deceptive conduct, and the imminent Financial Accountability Regime”.

Mr Rogers added that it is “clearly in the customer’s best interest” to allow insurers to help them understand the “appropriateness and affordability of their cover”, while some “guardrails will help ensure consumers are protected”.

MLC Life Insurance has also called for legislating consumer protections including education standards, quality assurance and oversight, clear limits to the scope of simple advice, as well as the expansion of the Life Insurance Code of Practice.

“These protections are all about making sure consumers are given the advice that’s appropriate to their needs, so we can offer affordable and appropriate insurance to everyone, not just those that can afford financial advice,” concluded Mr Rogers.