In Australia, ClearView Financial Advice has offered $730,138 in financial compensation to 215 clients, following the completion of a review and remediation program for clients who received poor life insurance advice.
Under this program, the company reviewed 4,269 advice files from 279 of its advisers and remediated clients who had suffered loss.
Aside from those who were offered financial compensation, a further 21 clients received non-financial remediation through reissued advice documents and fee disclosure.
ASIC stated it first identified issues of non-compliant advice by ClearView’s representatives back in 2014, during an industry-wide review of retail life insurance.
The regulator found a sample review of ClearView’s advice files highlighted broad areas of concern including:
- Inadequate needs analysis for client
- Insufficient explanation about the pros and cons of using superannuation to fund insurance premiums
- Inadequate consideration of premium affordability issues
- Poor disclosure about replacement products
ASIC raised these issues as well as some concerns related to the conduct of Jason Churchill, one of ClearView’s advisers at the time.
ASIC accepted an enforceable undertaking (EU) from Churchill in 2016, for failure to meet his obligations as a financial adviser. Under the EU, Churchill agreed to undergo additional training, adhere to strict supervision requirements and have each piece of advice audited by his authorising licensee before it was provided to clients.
ClearView separately undertook to review advice previously provided by Churchill and remediate clients who had received inappropriate advice.
The company also commenced a review of the personal insurance advice provided by its advisers to determine if there was a systemic issue related to the broad areas of concern identified by ASIC and engaged Deloitte to provide independent oversight. This review found that a number of ClearView’s advisers did not undertake adequate ‘needs analysis’ for clients.
“The needs analysis is a critical part of the financial advice process.”
“The needs analysis is a critical part of the financial advice process. It enables advisers to understand their clients’ financial situation, needs and objectives, and provides the basis for the financial advice,” ASIC stated.
ClearView then undertook the full review and remediation program to identify all instances of this issue and to remediate any adversely affected clients.
This program was in accordance with Regulatory Guide 256: Client review and remediation conducted by advice licensees (RG 256) and was overseen by Deloitte.