The Council of Australian Life Insurers has recommended to the government having a Certificate IV as the baseline education requirement for qualified advisers for life insurers.
The government announced, as part of its response to the Quality of Advice Review, that super funds along with other institutions would be permitted to give scoped advice via employed staff that didn’t have the same level of education as relevant providers currently on the ASIC Financial Adviser Register.
CALI believes a Certificate IV qualification will maintain the right consumer protections and will mean team members are adequately trained to provide advice, and has not suggested this apply to other sectors like the super funds which had been the centrepiece of the reform.
CALI chief executive Christine Cupitt says customers have been urging them for a more “comprehensive level of customer service” which allows them to get answers for simple questions.
“We thought deeply about what the right level of training would be to make sure that service can be provided with our customers at the centre of what we’re doing,” Cupitt tells Professional Planner.
“To that end, we think an Australian Qualification Framework level four is the right level.”
According to the Australian Qualifications Framework, Certificate IV (AQF4) sits below a Diploma (AQF5) and Bachelor’s Degree (AQF7).
Currently, a prospective adviser looking to join the profession as a holistic adviser would be required to hold an approved AQF7 qualification.
The minister has yet to announce what minimum level of competency will be required for qualified advisers, but many within the industry expected that it would be at least diploma level, or AQF Level 5.
However, Cupitt says a diploma would take longer for people to achieve and there is a dire unmet need for advice in the life insurance space with millions of Australians with life insurance needs who aren’t able to access advice.
Diplomas generally take a minimum of a year to complete, whereas a Certificate IV can be done in six months.
“The key driver in a proposal for an AQF4 is thinking deeply about the complexity of the service we propose to provide and what an appropriate and adequate level of training would be,” Cupitt says.
“It’s drawing that link which has been at the heart of our thinking on this. It’s not something we take lightly. It’s absolutely been the centre of some deep thinking of our industry.
Cupitt says any Certificate IV qualification would be required to go through a rigorous approval process and the council believes this is the right level for the complexity of the work that done by life insurance advisers.
“Anything higher than that is going to present barriers to making sure we can take swifter action to have a workforce in place that will meet these unmet customer needs,” Cupitt says.
Reflecting on the proposal which the council says has been put to government, Cupitt notes CALI research that found in the last three months 30 per cent of Australians have thought about getting advice for their life insurance needs but only 10 per cent have done so.
Cupitt says the AQF Level 4 qualification would just be a minimum threshold with all insurers relying on further in-house training.
“The life insurers will have other legal obligations to make sure their team is appropriately trained, monitored and supervised,” Cupitt says.
“In addition to the formal qualification, there will be in-house training on the products that life insurers offer, there will be in-house training on the compliance processes and the advice processes that need to be undertaken.”
Cupitt adds there would also be continued evaluation of the adequacy of the training.
“That’s not a set and forget – that inhouse training is ongoing,” she says.
She points to an example of customer calling an insurer to ask about the difference between a three or six month waiting period for income protection. The insurer can give factual information on the issue but it may not be enough for a consumer to understand if the product is appropriate for them.
“Being able to ask some basic questions of them about their financial situation and the amount of sick leave they’ve got, the amount of savings that help navigate that decision is the kind of work we envisage being done,” Cupitt says.
The council believes this is just an extension of customer service that matches consumer expectations across different industries.
“It’s customers ringing into that insurer and that does set an expectation that the information and advice would be in relation to that insurer’s products,” Cupitt says.
“It’s also the responsibility of the insurer to make sure the customer fully understands what they can expect, that they fully understand this is not a holistic advice conversation, they fully understand the insurer won’t be comparing products in the market.”
But while those examples slip into the realm of advice, Cupitt says there still needs to be a way for insurers to refer out to independent holistic advisers.
“Where life insurers identify customers have more complex needs, there would be those referral arrangements in place,” Cupitt says.
“Financial advisers play an essential role in helping people navigate complex life insurance needs and complex financial needs in general and having life insurers play a role here is not about getting in their way, it’s about complimenting the important work they do.”
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