Risk Product, Company and Regulatory Updates as at 19 February 2019

Product Updates

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MLC MySuper goes from single strategy to lifestage
MLC’s default superannuation product is moving from a single strategy to lifestage, while increasing its allocation to growth assets. MLC MySuper has a current allocation of 70 per cent to growth assets and 30 per cent to defensive assets. The single strategy will be replaced by a combination of three portfolios: growth, conservative, and cash. Members will be automatically allocated by age.

ClearView updates LifeSolutions pricing
LifeSolutions pricing for new and long-standing customers has been updated at ClearView. The changes include lower stepped and hybrid life and total and permanent disability (TPD) rates, and higher trauma, income protection and business expenses cover. New level premium business premiums are also increasing. Existing clients will see changes in pricing from 22 April 2019.

Company Updates

Delays for MLC sale
NAB said in a trading update that the sale of its wealth management arm MLC would likely be delayed, possibly until June 2020, due to the regulatory and operating environment.

Westpac looking at selling in-house planners
Westpac is investigating its options for selling about half of its in-house financial planning arm to a Melbourne-based wealth management company. The sale would include the top performing 150 financial advisers, with the leftover advisers to eventually be let go during a business wind-down.

Regulatory Updates

Fourth report on four major banks released
The House of Representatives Standing Committee on Economics has released the fourth inquiry report on Australia’s four big banks - Commonwealth, Westpac, ANZ and NAB. In October 2018 chief executives from each bank appeared before the committee, after Commissioner Kenneth Hayne’s released the Royal Commission Interim Report. Chair of the committee, Tim Wilson, said that the government had agreed to all 76 recommendations in the report.

Download the committee report

FASEA adjusts adviser exam
The Financial Adviser Standards and Ethics Authority (FASEA) released new information on the financial adviser exam, with some concessions added. The topic of Financial Adviser Regulatory and Legal Requirements will now only cover the Tax Agents Services Act, and not include broader requirements for the Tax Practitioners Board.

The reading time for the 3.5 hour exam is now shorter, at 15 minutes instead of 30 minutes. FASEA is also considering adding more exam centres in 2020 for those in regional areas, as per demand. Assessment is to be conducted in capital cities and regional centres, with each exam attempt costing $540 excl. GST.

Freedom Insurance Group suspends trading
After a problematic appearance at the Royal Commission hearings in 2018 and a pending announcement on its financial position, Freedom Insurance Group has suspended trading. Freedom Insurance announced it would overhaul its business model and cease the sale of life insurance products, resulting in a probable liquidity crisis this year, despite the company still being currently solvent.

A review by Deloitte found that new sales of its life insurance products was not viable. Prior to the Royal Commission, shares of Freedom Insurance were trading at about 40 cents; they are now worth 2 cents.

ASIC appeals Federal Court decision on Westpac breaches
ASIC is pursuing Westpac to prove that two Westpac subsidiaries provided personal financial advice without the correct licence to do so. A 2018 decision by the Federal Court determined that the phone calls to customers whereby bank staff at Westpac and BT recommended a rollover to the in-house superannuation funds did not constitute personalised advice. The banks are only licensed to provide general financial advice.