FSC releases final APL standard


By Malavika Santhebennur

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The Financial Services Council (FSC) has finalised its standard for life insurance approved product lists (APLs) and says the amended standard will go further than previous drafts.

The FSC announced yesterday that its latest iteration would require the life insurance APLs of members to offer a choice of three or more life insurance providers, supported by strong off-APL processes that would allow advisers to recommend products that are not on the list to meet best interest duty obligations.

Most FSC advice licensee members already offered a choice of three or more providers on their APLs, the council confirmed.

“To ensure consumers have full transparency to make an informed choice, disclosure of the number of products and providers on the life insurance APL will also be included in the advice process,” the FSC said.

“Additionally, there is a requirement for APLs to have a reasonable basis and to be formulated with the best interest duty in mind.”

The standard has also outlined best practice principles that would not be mandatory but were intended to assist with creating and maintaining a life insurance APL.

These included having an investment and product committee of experienced research professionals to assist with a licensee’s internal research process.

Licensees would also be encouraged to establish and use benchmark methodology in identifying which products would be suitable for inclusion on the APL, and consider various factors when selecting an insurance product or provider such as claims payout ratios, pricing and corporate strength.

The FSC released its draft standard for life insurance APLs in April. The final standard would commence on 1 January 2018, with compliance being compulsory from 1 July next year.

The standard would be reviewed within 18 months of commencement, the FSC said.

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