In a new interview with International Adviser, Ashok Sardana “fervently” reiterated his call to ban 25-year ILAS savings plans. He said:
“these are not products which are suitable for most clients – in 99% of cases the clients will not see completion of the plan. These policies are only good for the adviser and the life company.”
And then he added:
“These products should have health warnings like cigarette packets which say – ‘this product is not good for your financial wellbeing.”
Amen! I applaud his truthfulness.
Although he didn’t say it explicitly, he implied that brokers who sell 25-year ILAS savings plans are blatantly violating their legal duty to prioritize clients’ interests above their own, which means brokers could be sued for selling these products. Moreover, the brazenly exploitative nature of the products also raises a question about whether an act of bribery has taken place when an insurer (a creator of these products) pays an exorbitant commission to induce brokers to sell them. If so, it could potentially land both brokers and insurers in prison. This is probably why Mr. Sardana doesn’t allow his employees to sell these products.
If 25-year ILAS savings plans are so bad that brokers can potentially be sued and imprisoned for selling them, then obviously the products have no justification for existing.
The SFC thus has a responsibility to immediately ban these and all other exploitative ILAS products, as it promised to do last week.
Currently, the minimum lock-in for most ILAS products is 5 years. Due to their fiduciary responsibilities, brokers almost never have a justification for selling a product with a lock-in longer than this minimum. Consequently, all ILAS products with a lock-in longer than 5 years must be banned ASAP.
[NOTE: In Hong Kong, “a person convicted of an offence under Section 9 of the Prevention of Bribery Ordinance is subject to a maximum penalty of seven years’ imprisonment and a fine of HK$500,000.”] (Source)