Product, Company and Regulatory Updates as at 15 May 2018

Product Updates

Zurich offers new lifestyle program, updates Active product range and definitions
A mobile app-based lifestyle program has been rolled out by Zurich to its retail life insurance policyholders to provide discounts on lifestyle and entertainment offers. Membership to the Loving Life program will be offered to 12-month policyholders.

Zurich has updated its Zurich Active product range, effective 30 April. The changes relate to a full review of definitions and the addition of new insurable events.

Zurich has added new health events to its severity-based trauma insurance component, including:

  • Bacterial meningitis
  • Advanced diabetes
  • Type 1 diabetes
  • Encephalitis
  • Out of hospital cardiac arrest
  • Early stage chronic lymphocytic leukaemia
  • Severe rheumatoid arthritis with a permanent impact to daily life

Some existing health events have been moved to a higher benefit category, including:

  • Diagnosis of motor neuron disease
  • Severe osteoporosis before age 50
  • Coma
  • Total cystectomy requiring urinary conduit
  • Paraplegia
  • Total mastectomy for carcinoma in situ of the breast

The definitions of 20 insurable events have been updated by Zurich:

  • Heart attack
  • Lymphoma
  • Coma
  • Intensive care unit/hospital admission
  • Chronic lung disease
  • Malignant brain tumour
  • Pancreas waitlist/transplant
  • Cancer
  • Severe Crohn’s disease
  • Total mastectomy
  • Complete loss of hearing
  • Gastrointestinal disease
  • Prostate cancer requiring brachytherapy, radiotherapy, or radical prostatectomy
  • Complete loss of hearing in one ear
  • Severe loss of binaural hearing
  • Permanent vegetative state (now permanent unresponsive state)
  • Confirmed diagnosis of myelodysplastic syndrome or any myeloproliferative disease
  • Stroke
  • Severe peripheral vascular disease resulting in amputation of the foot or leg
  • Permanent and irrecoverable loss of sight

Zurich has noted that there will be no changes to rates during this upgrade.

Company Updates

NAB to leave advice sector, divests wealth operations
NAB has announced its withdrawal from the financial advice sector and is looking for ways to separate from its advice business by the end of 2019. This will result in the bank separating from providing superannuation, platform, and asset management services. NAB will retain its JBWere and nabtrade businesses.

ANZ to increase share buy-back, cuts sales incentives for advisers
ANZ is considering buying back up to $1.5 billion in shares using the first payment from the sale of its life insurance arm to Zurich, on top of its current buyback program. ANZ financial advisers have been warned that all sales incentives relating to financial advice have been removed and advisers will have their contract terminated if they fail two audits. Advisers will be assessed on their customer satisfaction performance and adherence to ANZ risk and compliance standards. An audit pass rate and termination policy has been introduced to identify advisers providing inappropriate advice to clients.

New advisers will be required to hold a relevant undergraduate degree and industry certification, and existing advisers will be required to enrol in the necessary further training by January 2019.

Compensation has been promised to 9,000 ANZ customers who received inappropriate advice from ANZ professionals.

Regulatory Updates

CBA finds no evidence of compromised customer information
The Commonwealth Bank (CBA) has confirmed there is no evidence that customer information has been compromised following a 2016 incident. CBA has continued to monitor accounts and confirms there is no need for customers to take action.

Mackellar’s AFS licence cancelled by ASIC
The Australian Financial Services Licence (AFS) of Mackellar Financial Services has been cancelled by ASIC following a suspension in October 2017. Mackellar failed to lodge auditor’s reports and financial statements for four years.

New International paraplanning standard launched in the UK
Standards International, a United Kingdom consulting firm, has initiated a new paraplanning standard designed to provide a new framework for the industry, and has been designed so the programme can be replicated in other countries.

The paraplanning standard covers:

  • Remuneration and rewards
  • Insight into the future of the financial services sector in each country
  • Desirable and essential abilities and skills
  • A guide for learning and development
  • Principles and behaviours
  • The best practice guides, tools, and templates
  • The responsibilities and expectations of prospective and current paraplanners
  • The role specifications for an international paraplanner

The standard will extend across the trainee, certified, and advanced certified levels.

Recommendations submitted to the Royal Commission by ASIC and the FPA
Several recommendations have been made to the Royal Commission by ASIC and the Financial Planners Association of Australia (FPA). These recommendations include removing grandfathered advice commissions, and large licensees to be required to operate product manufacturing and advice businesses separately.

The FPA agreed with ASIC’s recommendation to end grandfathering but has suggested a three-year period to phase the practice out.

Class actions filed against AMP
AMP has been served with two class action lawsuits following the Royal Commission. Phi Finney McDonald has filed proceedings in the Federal Court against AMP, representing shareholders who acquired interest in the wealth manager between 6 May 2013 and 13 April 2018.

Quinn Emanuel Urquhart and Sullivan (QE) filed a class action in the Supreme Court of New South Wales against AMP on behalf of shareholders who acquired shares between 10 May 2012 and 15 April 2018. The class action alleges that AMP has breached is disclosure obligations and made misleading statements.

Group life insurance offered as opt-in after Federal Budget
As part of the new Federal Budget, all group life insurance for those under 25 will be offered on an opt-in basis to prevent superannuation balance erosion by insurance premiums. This change has been made as part of wider superannuation reforms, which include a ban on superannuation account exit fees and a cap for investment and administration fees for low balance accounts.

There will be an opt-in extra for accounts with balances less than $6,000 and accounts that haven’t received a contribution in over 13 months, as well as those under the age of 25. These changes have been made to protect the superannuation of young people and those with low balances. Changes will take effect from 1 July 2018.