ICA offers 'in-principle' support for Quality of Advice changes
The Insurance Council of Australia (ICA) has offered in-principle support for Quality of Advice review proposals that it says could lead to “less constrained” interactions with customers.
“Our experience is that the current regulatory regime unnecessarily constrains the ability of licensees to provide product advice tailored to a customer’s specific query or circumstances,” it says in a submission.
But ICA says any change to introduce a proposed “good advice duty” should be calibrated so it’s suitable for consumer insurance needs, which in most cases would be simple compared with investment-type products.
“A key consideration is what kind of information an insurer should rely on to meet the good advice duty,” the submission says.
ICA says a call centre operator may not have reasonable access to a claims database at the time advice is provided, while an insurer may already have information about a non-customer in their systems, where they may have been a party in a previous insurance incident.
“Consideration should be given to appropriate legislative parameters so that only relevant information and information that is reasonable for the advisor to hold is required in considering whether the good advice duty has been met and legislative parameters to ensure there is no unintended confusion between factual information and advice,” it says.
The proposals paper has recommended widening the reach of personal advice and removing general advice as a regulated financial service. The best interests obligation would be replaced with a good advice test that would involve less compliance paperwork.
ICA says it’s important there is a clear demarcation between personal advice and factual information and it recommends the personal advice definition is consistent with the advice definition under s766B of the Corporations Act.
Record keeping should be technologically neutral so telephone recordings and other accessible recordings can be used, it also suggests.
“The specific requirements around records required to be retained also pose challenges that require discussion, for example, consideration to the outputs required if a customer requests the record of advice,” the submission says.
ICA says “an adequate period” for transition to the new proposals would be required.
