Advice regulations need clean up

Advice regulations need clean up

Advice regulations need clean up Regulations around general and personal advice need to be changed, a broker has said.

Currently, ASIC states that general financial advice does not take into account any personal objectives, financial situations or needs.

As the name suggests, personal advice does take into account the personal situations of clients, with ASIC stressing that it is important to talk with a “licensed adviser.”

Robert Cooper, director of CPR Insurance Services, said that more needs to be done to ensure the differences between the two streams of advice are clear to clients.

“I would like the discrepancy about what is general advice or personal advice to be changed,” Cooper told Insurance Business.

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“For the average consumer, they would not know if they are getting general advice only or not.”

In the industry, the debate around advice continues to play out between brokers and direct competition.

Direct insurers are able to operate on a general advice model and expect insureds to research their own insurance needs and decide which product is best for them. More often than not, this does not happen.

While brokers do have to work to ensure that they are the first port of call for a client looking for insurance, changes to advice regulations would help consumers and limit underinsurance, Cooper believes.

In addition, he noted that, currently, the approach by direct insurers leaves a lot to be desired.

“Simply saying ‘here is your cover in this 80 page booklet’ and expecting them to read and understand it, to me, is a breach of a duty of care that is owed when providing insurance advice,” Cooper continued.

Do you agree that advice regulations need to be changed? Let us know your thoughts by leaving a comment below.

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  • Louise 27/01/2017 12:02:56 PM
    Good article.

    There is much confusion about the term "personal advice" as well, perhaps it should be altered to "professional advice"?

    Lots of Licence Holders are offering "personal advice" from staff who are not qualified to provide this type of advice, as only holding Tier 2 or nothing and ASIC should be making all Auditors check this and Licence Holders comply. Also not enough Licence Holders are encouraging their staff to attend regular training outside of the office and maintain their minimum required hours of compliance and personal professional development.

    Greater emphasis and praise should be directed to Brokers for being qualified professionals and far more stringent and up front notification should be made aware to anyone who calls a direct insurer, that they are only being provided with "general advice". However, the general public does not know what "general advice" verses "personal advice means" and most if not all direct insurers focus on price only!

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  • Wendy Foweraker 27/01/2017 12:06:43 PM
    I agree the advice needs to be changed and to become clearer for the Brokers who deliver the service and information to the end clients and for it to be changed for the consumers to have a clear understanding of what the difference is between the information and advice that they are provided and why. We need to continue to be the advocate for both our brokers and for the brokers clients and lead the way for better service and efficient process in the way we delivery this information and be consistent across all areas of insurance and who can advise and who cant. Clients/Consumers/Customers have to be the winner, it is our duty of care and too many grey areas on what is Personal Advice and what is General Advice.
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  • Wade Duff 30/01/2017 9:31:10 AM
    This has been one of the most misunderstood areas and needs to be simplified. Changing the definition of Advice will only go so far to fix the problem further advice warnings are needed for Direct Insurers to have an additional Warning to their clients that they are not taking any responsibility for the customers choice of product or its adequacy to cover the risks they have.
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