Advisers have been disciplined for failures to observe replacement business guidance for insurance, if they are AFAs, and in this case, in a QFE. Link. Reading the article I noted that it was the QFE itself that made the referral. Also, that they failures were mainly record-keeping issues. These are significant, but the comments of the disciplinary committee about harm are important too.
The FMA recently complained about an AFA who provided both advice on a pension transfer and replacement of insurance. The Financial Advisers Disciplinary Committee have heard the case. The part of the decision which relates to insurance is particularly interesting:
"There is nothing to suggest that his recommendation was supported by analysis, apart from an indicative illustration provided by AIA and the Respondent's emailed statement that AIA was the only insurer who would offer "take-over terms". We do not know whether a fuller analysis would have led to the same conclusion but would have expected a far broader examination of what market options existed for the relevant client, even if that involved different terms. Financial decisions of this type typically involve trade-offs and analysis of those would be an expected and basic element of advice of this type"
Although I am duty bound to point out that I am conflicted - as I have a financial interest (indirectly) in Quality Product Research Limited, this looks like a strong indication that seeking options, proof of analysis, and comparing the market, are components of insurance advice that the FADC expect.
There are also parts of the decision that relate to pension transfers which are also of interest, and also relevant to providing insurance advice, particularly where replacement is being contemplated.
Also, aspects of the decision in relation to the fee that the adviser proposed, which was only to be paid if certain actions were taken, is worth reviewing. The FADC did not find that the FMA's complaint was made out, and allowed that although the adviser did have conflicted remuneration it was adequately disclosed.
You can read the decision at this link.