UPDATED: ISI changes anti-churning policy after meeting advisers

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The ISI has again changed its policy on replacing insurance policies after consulting with the major adviser organisations.

Friday, July 23rd 2010, 12:20PM 4 Comments

It says it has met with key representatives of the adviser community including the PAA, IFA, and LBA, as well as leading dealer groups to review the recently released Replacement Policy Advice brochure and form.

As a result it has made some changes "to better reflect the objectives of the process."

"ISI accepts that the wording used in the new brochure and form does not provide the level of balance that it should in this respect, and acknowledges that some changes are required. As a result work has commenced on identifying improvements to both the brochure and form that will ensure advisers and their clients can act with confidence."

The aim is to have the identified changes implemented before October 1.

It has accepted that some advisers may choose to continue to use the previous Advice on Replacement form.

"ISI remains committed to a process that ensures consumers are able to make fully informeddecisions about the insurance policies they hold, including the replacement of these policies," the association says in a statement.

"It is important that consumers regularly review their insurance cover to make sure it isappropriate for their needs and it is quite common, and can be correct, for policies to be replaced to take advantage of newer, better policy conditions."

Life Brokers Association president Ron Flood says the previous policy was scaremongering and misleading with some aspects of it also going over and above the Code and the Financial Advisers Act.

"Authorised financial advisers (AFAs) should be exempt from having to use the form because the Code already requires proper procedures.

"However, there is still a need for it as registered financial advisers and QFE's are not required to give written advice as long as they have competence, knowledge and skills."

ISI chairman Sean Carroll says the Association will consult on that.

ISI chief executive Vance Arkinstall admits that the problem with the previous brochure was that it was unduly negative, not painting the industry or advisers in as good a light as it should be.

The PAA welcomes the move

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