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 |
| How to Compare Income Protection Policies When You Have a Medical History In today's ever-changing world, financial security is a cornerstone of peace of mind, particularly for Australians grappling with medical histories. Income protection insurance emerges as a pivotal solution, safeguarding not only the individual’s fiscal health but the well-being of their dependents. This introduction explores the nuances of income protection insurance and its particular significance for those with pre-existing medical conditions. - read more
|
| The Myth of Unaffordability: How to Find Value in Income Insurance Policies Income protection insurance is often surrounded by the myth of being unaffordable, deterring many Australians from safeguarding their most valuable asset—their ability to earn. This introduction aims to address this misconception head on, revealing the real value that income insurance policies can provide. It is crucial to understand that the cost of such a policy pales in comparison to the potential financial hardship faced without one. - read more
|
| Why Income Protection Insurance is Vital for Your Financial Security Income protection insurance is a type of coverage that provides you with a financial safety net in case you are unable to work due to illness or injury. It typically pays up to 75% of your regular salary, helping you to continue meeting your financial obligations during difficult times. - read more
|
| Income Protection for Farmers: Ensuring Stability Through Tough Times The world of farming is one filled with uncertainties. Weather conditions, market prices, and various other factors can create a highly volatile income stream for those within the agricultural sector. This unpredictability can lead to financial instability that impacts not only the farmers themselves but also their families and the larger rural community. - read more
|
The amount it would cost to replace or rebuild an insured asset with one of similar kind and quality, without depreciation.