Labor inaction leaves customers wasting money on insurance

afr.com:

Labor’s delay in acting on a recommended overhaul of financial advice laws is leaving Australians stranded with unnecessarily expensive life insurance or without cover they need, insurers warn.

They say they cannot give advice to clients on questions as simple as changing life insurance as they age, have kids or pay off mortgages, which is causing unnecessary financial stress amid the cost of living crisis.

Stephen Jones is under pressure from insurers to reform financial advice laws. Natalie Boog

Labor has loosened the rules for super funds to give financial advice, based on the recommendations of an independent review, but refused to do the same for insurers and banks, instead opening afifth round of consultation for those industries.

Financial Services Minister Stephen Jones says he needs more proof that consumers need advice from insurers that they cannot get under the current regime and that, after the scandals uncovered by the banking royal commission, the industry can be trusted to give it.

But MLC Life chief individual insurance officer Michael Rogers said Australians were being left without adequate insurance cover orspending more on unsuitable products because they could not get advice now.

“Every day, customers contact us for help… and [they] are asking pretty basic questions, all ultimately seeking appropriate coverage that’s affordable and accessible,” he said.

“[But] it is virtually impossible to help if we can’t provide simple advice to our customers that suits their personal circumstances.”

Janine, a Sydney woman in her 50s, is one such consumer. She has been trying to cancel her life insurance and reinstate a previous income protection policy since January, but MLC Life cannot advise her on her options