Revamp Needed for Product Distribution, Urges ASIC

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The Australian Securities and Investments Commission (ASIC) has issued a stern reminder to issuers of insurance and other financial products, emphasizing the urgency to enhance their distribution practices to avoid violating compliance obligations.

Recent evaluations by the regulator unveiled significant weaknesses, including insufficient due diligence mechanisms for assessing and supervising third-party distributors, subpar consumer questionnaires, and a general lack of monitoring of consumer outcomes and product performance.

“This review offers an insight into how different industries and products are adhering to design and distribution obligations,” stated ASIC commissioner Alan Kirkland. “Where improvements can be made, we expect issuers and distributors to scrutinize the reports and elevate their distribution approaches.”

From October last year up until last month, ASIC's review covered 19 product issuers, including providers of funeral and accident insurance. The examination revealed persistent issues, particularly in funeral and accident insurance, where consumers still received quotes despite being outside the intended target market based on "knockout" question responses. Moreover, consumer questionnaires often only inquired about age, an eligibility criterion, without addressing critical affordability concerns.

Under the design and distribution obligations regime implemented since October 2021, financial product issuers are mandated to ensure their products are designed for and marketed to the correct target audience. This involves creating a target market determination statement for each product, outlining its appropriateness for the intended consumers and ensuring distribution conditions align with this target market.

“ASIC is particularly focused on fostering adherence to the design and distribution obligations,” the regulator mentioned. “We are committed to regulatory actions where necessary and leveraging these obligations to enhance consumer outcomes.”

Mr. Kirkland shared that ASIC has launched five civil proceedings related to these obligations, achieving three victories so far. Additionally, the commission has issued over 80 stop orders and published findings from seven reviews since the obligations came into effect.

Based on an article from Financial Services Online, it's clear that the current state of compliance in distribution need a proactive approach to better cater to the needs and protection of consumers. Taking heed of these regulatory insights will benefit both issuers and consumers in the long run.

Published:Thursday, 19th Sep 2024
Author: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

Share this news item:

Insurance News

Significant Decline in Australian Commercial Insurance Rates

25 Mar 2026: Paige Estritori

In the final quarter of 2025, Australian commercial insurance rates experienced a substantial decline of 12%, marking the most significant drop among the eight regions monitored by Marsh Risk's Global Insurance Market Index. This trend reflects a broader pattern of decreasing rates that began in early 2024, with the Pacific region, predominantly Australia, leading the way. - read more

Human Factors Dominate Causes of Major Truck Crashes in Australia

25 Mar 2026: Paige Estritori

The National Truck Accident Research Centre's 2025 Major Incident Investigation Report, supported by NTI, has identified human error as the predominant cause of major truck crashes in Australia. The report indicates that factors such as inattention, distraction, and inappropriate speed account for a significant proportion of these incidents. - read more

ASIC Launches Review into Motor Insurance Pricing Practices

25 Mar 2026: Paige Estritori

The Australian Securities and Investments Commission (ASIC) has initiated a comprehensive review into the accuracy and transparency of motor insurance pricing among major insurers, covering approximately two-thirds of the car insurance market. This investigation aims to ensure that insurers comply with legal disclosure requirements and provide clear explanations for premium calculations. - read more

AIA Australia's Latest Enhancements to Priority Protection Insurance

24 Mar 2026: Paige Estritori

AIA Australia has recently updated its Priority Protection life insurance suite, introducing changes designed to simplify discounts, enhance policy clarity, and support premium affordability. These enhancements, effective from 9 November 2025, reflect AIA's commitment to providing value-driven solutions for policyholders. - read more

Australia's Life Insurance Coverage Falls Short of Global Standards

24 Mar 2026: Paige Estritori

Recent findings from a survey conducted by Zurich and the University of Oxford reveal that Australia has one of the lowest life insurance penetration rates globally. The study indicates that only 27% of Australians have income protection insurance, and 25% possess life insurance coverage. These figures are notably lower than the global averages of 33% for income protection and 32% for life insurance. - read more

Click for more Insurance News

Household Insurance Articles

Top 10 Questions to Ask Before Buying Home Insurance in Australia

For many Australians, owning a home is a significant life achievement and a substantial financial investment. Protecting this asset is crucial, which is where home insurance becomes indispensable. As we navigate the complexities of life and confront the unpredictable forces of nature, the right home insurance acts as a financial shield against potential losses. Whether it's a natural disaster, accidental damage, or theft, having a robust insurance policy ensures that your home and peace of mind remain intact. - read more

10 Tips for Lowering Your Home and Contents Insurance Premiums

One of the best ways to lower your home and contents insurance premiums is to shop around for the best deal. Insurance companies often have varying rates, discounts, and offers that could save you a significant amount of money. Start by researching different insurance providers and their policy offerings. Make sure to compare not only pricing but also features, coverages and deductible amounts. - read more

Financial Planning for Homeowners: Top Strategies to Protect Your Assets

Financial planning is a crucial aspect of personal finance, enabling individuals to manage their money effectively and achieve their financial goals. For homeowners, financial planning takes on even greater significance. It involves not just handling your income and expenses, but also protecting valuable assets like your home and possessions. - read more

Why Income Protection Insurance Matters for Every Australian Earner

The unpredictable nature of life can often leave us vulnerable to financial uncertainty, especially when it comes to our ability to earn an income. Whether due to illness, injury, or unexpected job loss, the loss of income can have a devastating impact on our financial stability and quality of life. This is where the importance of insurance in financial planning becomes evident. - read more

The Essential Guide to Comprehensive Household Coverage in Australia

Comprehensive household coverage, often referred to as home insurance, is a policy designed to protect your home and its contents against a wide array of risks. This type of coverage typically includes protection against natural disasters, theft, vandalism, and various unforeseen events. In simple terms, it's the safety net that ensures peace of mind should the unexpected happen to your property or possessions. - read more

Knowledgebase

Grace Period:
A time period after the premium is due during which an insurance policy remains in force even if the premium has not yet been paid.

This website is owned and operated by Clark Family Pty Ltd (ACN 010 281 008) as Trustee for the Clark Family Trust (ABN 35 957 893 714), 43 Larch Street Tallebudgera QLD 4228. Clark Family Pty Ltd is an Authorised Representative (AR 1298860) of Unique Group Broker Services Pty Ltd (AFSL 509434) for financial product referrals and an Authorised Credit Representative (ACR 401491) of Saccasan Pty Ltd (ACL 386297). Check our licensing details on the ASIC registers: Clark Family Pty Ltd ACR, Clark Family Pty Ltd AR, Saccasan Pty Ltd, Unique Group Broker Services.

IMPORTANT: We do not provide financial product advice or credit assistance. We act solely as an introducer and refer enquiries to licensed third-party intermediaries, insurers, and lenders - with whom you can then deal directly. We may receive a fee or commission from these third parties in consideration for the referral. Before any action is taken to obtain a product or service referred to by this website, advice should be obtained (from either the third party to whom we refer you or from another qualified intermediary) as to the appropriateness of obtaining those products having regard to your objectives, financial situation and needs. Whilst we have our own process for validating the legitimacy of our referral partners, you should always verify the credentials of your financial adviser before proceeding with recommendations that they may present. Visit the ASIC website for further information.