Anti Churning Provisions, what are they?

The term “Churning” refers to the practice of some financial providers persuading clients to cancel an existing financial product, (like a life assurance policy) and take out a new one in replacement solely to generate additional sales commissions for the intermediary or financial provider involved.

The Central Bank Consumer Protection Code demands that a clients best interests must be paramount in recommending financial products and should not be influenced by commission or other earnings related to the sale of a new policy. The clients existing policies and assets must be taken into account when quantifying the amount of cover required to meet the clients needs.

Current policies will usually reduce the need for further cover. Therefore, in the majority of cases the financial intermediary should recommend retention or continuation of the existing policies unless these are clearly unsuitable for the clients circumstances. Where the policy is unsuitable the financial provider should recommend surrendering such a policy and replacing it with a more suitable product which meets the clients current and future needs.

If an intermediary or insurer knows that a …

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