Revamp Needed for Product Distribution, Urges ASIC
Revamp Needed for Product Distribution, Urges ASIC
Recent evaluations by the regulator unveiled significant weaknesses, including insufficient due diligence mechanisms for assessing and supervising third-party distributors, subpar consumer questionnaires, and a general lack of monitoring of consumer outcomes and product performance.
“This review offers an insight into how different industries and products are adhering to design and distribution obligations,” stated ASIC commissioner Alan Kirkland. “Where improvements can be made, we expect issuers and distributors to scrutinize the reports and elevate their distribution approaches.”
From October last year up until last month, ASIC's review covered 19 product issuers, including providers of funeral and accident insurance. The examination revealed persistent issues, particularly in funeral and accident insurance, where consumers still received quotes despite being outside the intended target market based on "knockout" question responses. Moreover, consumer questionnaires often only inquired about age, an eligibility criterion, without addressing critical affordability concerns.
Under the design and distribution obligations regime implemented since October 2021, financial product issuers are mandated to ensure their products are designed for and marketed to the correct target audience. This involves creating a target market determination statement for each product, outlining its appropriateness for the intended consumers and ensuring distribution conditions align with this target market.
“ASIC is particularly focused on fostering adherence to the design and distribution obligations,” the regulator mentioned. “We are committed to regulatory actions where necessary and leveraging these obligations to enhance consumer outcomes.”
Mr. Kirkland shared that ASIC has launched five civil proceedings related to these obligations, achieving three victories so far. Additionally, the commission has issued over 80 stop orders and published findings from seven reviews since the obligations came into effect.
Based on an article from Financial Services Online, it's clear that the current state of compliance in distribution need a proactive approach to better cater to the needs and protection of consumers. Taking heed of these regulatory insights will benefit both issuers and consumers in the long run.
Published:Thursday, 19th Sep 2024
Source: Paige Estritori
Share this news item:
| Insuregroup's Remarkable Growth in Truck Insurance Policies 21 Feb 2026: Paige Estritori Insuregroup, a specialist insurance brokerage serving Australia's transport and logistics sector, has recently announced a significant milestone: processing over 10,000 insurance policies since its inception, with a 25% increase in policy volume over the past year. This growth underscores the escalating demand for comprehensive truck insurance solutions tailored to the unique needs of Australian freight operators. - read more |
| ICA's Strategic Plan to Combat Escalating Motor Insurance Costs 21 Feb 2026: Paige Estritori The Insurance Council of Australia (ICA) has unveiled a comprehensive report titled 'Motor Insurance Policy Paper – A Roadmap for Reducing Rising Premiums,' addressing the significant 42% increase in comprehensive motor insurance premiums since 2019. This surge has brought the average annual premium to $1,052 in 2024, prompting the need for coordinated action to alleviate the financial burden on consumers. - read more |
| Heightened Road Risks During Holiday Season: Insurers Issue Warnings 21 Feb 2026: Paige Estritori As the Australian summer school holidays coincide with peak freight activity, insurers and transport specialists are raising concerns about heightened road risks. The surge in freight traffic, coupled with increased holiday travel, amplifies the potential for road incidents, particularly involving heavy vehicles. - read more |
| AustralianSuper Announces Reduction in Default Income Protection Cover 20 Feb 2026: Paige Estritori AustralianSuper, one of Australia's largest superannuation funds, has announced a significant change to its default income protection insurance. Effective from 28 February 2026, the fund will reduce the default income protection cover to $1,000 per month. This adjustment aims to align insurance coverage with members' actual income levels and prevent over-insurance, which can erode retirement savings. - read more |
| Life Insurance Comparison: Key Questions to Ask Your Insurer Life insurance is a crucial consideration for middle-aged to older Australians. It provides financial security for your loved ones in the unfortunate event of your death. Understanding the various options available is vital to making an informed decision. - read more
|
| The Essential Guide to Calculating Your Income Insurance Coverage Income protection insurance is a type of policy designed to provide you with a financial safety net in the event that you are unable to work due to illness or injury. Its core purpose is to replace a portion of your income, helping you to maintain your standard of living until you're able to return to work. It's an essential consideration for anyone who relies on their income to support themselves and their families. - read more
|
| Protecting Your Future: A Simple Approach to Life and Disability Insurance Welcome to the crucial conversation about safeguarding your future through life and disability insurance. Many of us ponder the distant horizon of life's 'what ifs,' but are we truly prepared? The reality is that our financial security can be drastically affected by unforeseen events—a serious illness or a sudden disability that prevents us from working. That's where life and disability insurance come into play, serving as critical safety nets that can keep us afloat during tough times. - read more
|
| The Importance of Disability Insurance in a Freelancing World Freelancing in Australia has witnessed exponential growth over the past few years. With the rise of the gig economy, more individuals are enjoying the flexibility and independence that come with being their own boss. From digital marketers to graphic designers, Australians are seizing various freelancing opportunities, embracing the freedom of working on projects that align with their passions. - read more
|
A specific type of property insurance that covers losses and damage caused by flooding.