This recent recent enforceable undertaking (EU), for an adviser in QLD, relating to life insurance replacement advice serves as a timely reminder to all of us advisers.
- failed to undertake adequate inquiries into the relevant personal circumstances of some clients to whom he made recommendations to switch life insurance policies
- failed to provide adequate replacement product advice in the Statement of Advice, preventing the client from making an informed decision to switch life insurance and superannuation products advised purchasing life insurance that was too expensive for the client
- failed to consider the longer term impact on retirement savings of placing life insurances within superannuation, and
- failed to provide accurate information about the clients’ circumstances within the Statement of Advice.
The EU is a result of ASIC’s Life Insurance Lapse Data Project (LILD Project) which was established in August 2016. Under this project, ASIC receives reports from life insurers that list the names of advisers who meet specific thresholds relating to lapsed policies.
It’s up to all of us to “know your client” and act in the “best interest” in all advice we give.