Risk Regulatory Update

2023 financial adviser exam dates released, latest exam results in

The Australian Securities and Investments Commission (ASIC) has released the dates for the first 2023 financial adviser exams. The first sitting will be held on 16 February 2023, with enrolments open from 10 January, closing 30 January. The subsequent sittings are 11 May, 10 August and 9 November. All exams are now done virtually.

Exam results are in for the November 2022 sitting, with just 57 per cent of candidates passing. Forty-three per cent of the 282 candidates were sitting the exam for at least the second time.

ASIC urges insurers to review claims payment systems

ASIC is asking life insurance companies to review their claims calculations and payment systems for accuracy after several system failures have ben identified that incorrectly applied consumer price indexation to life insurance policy benefits and other payment errors.

Seven life insurers had breach reports for miscalculations of benefits, with clients under or overpaid on claims.

FPA and AFA seeking feedback on a new name, merger phase 2 in place

Members views have been sought on a new name for the joint association of the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA). Voting will begin in Feburary 2023, however, still, 75 per cent of voting members will need to agree to the proposal before it will go ahead.

A joint statement published stated the two associations are now welcoming feedback on a merger summary document and a draft consultation for the proposed merged association.

Regulatory concerns on premium increases

The Australian Prudential Regulation Authority (APRA) and ASIC are concerned after complaints from consumers regarding premium price increases in retail life insurance.

A letter sent to the heads of all life insurance companies and friendly societies outlined the concerns, which include that premium increases may not have been applied appropriately in accordance with policy terms, and through the reasonable expectations outlined in disclosure and marketing materials. The inference being that some company systems, processes and controls are not effective. A review has been requested by companies by 31 March 2023.

ASIC starts proceedings against OnePath Life for breaches of utmost good faith

ASIC has commenced proceedings against OnePath Life with allegations of failure to comply with its duty to act with utmost good faith in claims handling. This is a first for ASIC under new civil penalties introduced in 2019.

 The case against the life insurer regards a customer with an income protection policy started in 2016 with advice from a financial adviser, when OnePath Life was owned by ANZ. The customer disclosed prior mental health-related issues.

The customer made a claim in 2018 after a shoulder injury, and during the claims process, OnePath Life investigated the customer and found more specific information regarding hospitalisation for mental health issues many years prior to her application for the insurance policy.

OnePath Life then chose not to pay out the policy based on the idea that the customer acted fraudulently by not disclosing the hospitalisation. ASIC alleges that in doing so, the insurer failed to act with utmost good faith in its handling of the claim.

ASIC alleges that OnePath Life failed on several measures, including speaking to the customer about the lack of disclosure, not investigating further into the explanation for the non-disclosure, including not speaking to the adviser involved, and when denying the shoulder injury claim, did not inform the customer of her right to appeal the decision.

Court dismisses proceedings on misleading or deceptive conduct allegations by CBA

The Federal Court has dismissed proceedings against Commonwealth Bank of Australia (CBA) brought by ASIC regarding allegations of misleading or deceptive conduct, false or misleading representations and contraventions of its financial services licence regarding incorrectly charging monthly access fees to customers.

The court found that the fees charged to customers who were entitled to fee waivers, amounting to $55 million, were under the proviso that any errors found should be brought to the bank’s attention and the error would be rectified. CBA stated in its terms and conditions that sometimes things went wrong and they would make it right. In this, the court found CBA did not breach its obligations.

New adviser registration requirement with ASIC

Financial advisers must now register with the ASIC Financial Services and Credit Panel, while also being on the Financial Adviser Register. Advisers have until 1 July 2023 to register.