Australia: action against risk licensee over sales practices and best interests tests - and whether they apply here
Risk Info has details of ASIC's investigation and subsequent action against a risk licencee for breaches of best interests requirements. Little detail is given but one item tells us that lack of training and assuming a requirement for cover were central factors:
"...ASIC has also alleged that NSG has not appropriately trained its advisers and claims it has trained its advisers that it was almost always in a client’s best interest to take out some form of life risk insurance, regardless of a client’s financial situation."
Most current advice processes focus on the sum insured question, with selection on insurer a distant third. The fundamental question of need for cover is often only addressed by implication. While I agree that most people of working age probably do have a requirement for cover, that doesn't mean the question can be ignored when a client sits in front of a financial adviser, unless it is explicitly agreed to remove it from scope.
The result? $1 million in penalties, plus other consequences.
Here in New Zealand, in the unit standards for training on insurance, it highlights the need to consider the alternatives to insurance, and the need to consider state benefits (including ACC) and how they may interact with the insurance programme. So it is already a requirement - at one level - to consider this area as part of your advice here, unless you are specifically severing it from scope. Whether that is effectively brought through into what our regulator expects to see depends on your interpretation of 'reasonable care, diligence, and skill' - but under new draft law and Code, I expect that it should be in the future.