Australian financial services (AFS) licence holder ClearView Financial Advice Pty Ltd (ClearView) has completed a review and remediation program for over 200 clients who received poor life insurance advice.
Under this program, ClearView reviewed 4,269 advice files from 279 of its advisers and remediated clients who had suffered loss. 215 clients were offered $730,138 in financial compensation and 21 clients received non-financial remediation through reissued advice documents and fee disclosure.
ASIC first identified issues of non-compliant advice by ClearView’s representatives during an industry-wide review of retail life insurance in 2014 (14-263MR).
A sample review of ClearView’s advice files highlighted broad areas of concern such as 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 and 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.
In 2016, ASIC accepted an enforceable undertaking (EU) from Mr Churchill for failure to meet his obligations as a financial adviser (16-008MR). Under the EU, Mr 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. Separately, ClearView undertook to review advice previously provided by Mr Churchill and remediate clients who had received inappropriate advice.
ClearView also began 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. It enables advisers to understand their clients’ financial situation, needs and objectives, and provides the basis for the financial advice.
To identify all instances of this issue and to remediate any adversely affected clients, ClearView undertook a full review and remediation program in accordance with Regulatory Guide 256: Client review and remediation conducted by advice licensees (RG 256). Deloitte oversaw the review and remediation program to ensure that it was conducted in accordance with the principles set out in RG 256.