Senate Signs off on Financial Adviser Reforms – Changes to Claim Volume/Risk Profile Ahead?

Belinda_RandallLast Week the Senate passed the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 and paved the way for wide ranging reforms (and increased compliance obligations) in the financial advisory industry. The new regime starts on 1 January 2019 and includes the following reforms:

– Compulsory education requirements for both new and existing financial advisers.
– Supervision requirements for new advisers.
– A code of ethics for the industry to apply from 1 January 2020.
– An exam that will represent a common benchmark across the industry.
– An ongoing professional development component.

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ASIC reveals ‘hot spots’ for the insurance industry in 2017

Benjamin HineLast week Greg Medcraft, the chairperson of the Australian Securities and Investments Commission (ASIC), delivered a speech to the Insurance Council of Australia Annual Forum on the current insurance environment and ASIC’s priorities for the coming year.

Current environment

The speech commenced by noting that 2016 was an eventful year for the insurance industry.

In particular, Medcraft noted the impact of technology and social media and the impact that technology is having on consumer empowerment. Consumer expectations are changing and the impact of social media means that consumers are able to express themselves regardless of media interest.

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To cap or not to cap? Tassie finally joins the party

natasha_stojanovichLate last year Tasmania passed changes to its capped liability legislation, finally bringing it into line with the mainland, more than 10 years after the legislation was first introduced in the apple isle. The legislation allows professional groups to register schemes, by which their members can, by statute ‘cap’ or limit their professional liability, to be consistent with their level of professional indemnity insurance. Such schemes are designed to promote the availability and affordability of professional indemnity insurance, particularly for higher risk professional groups.

Prior to the change, the Tasmanian legislation contained a singularly unhelpful provision ’27(c)’, which was not in the legislation for all other states and territories. Effectively, ’27(c)’, meant that consumers could demand professionals opted out of schemes, and undermined their effectiveness. In practice, the clause, which was unique to the Tasmanian legislation, rendered the legislation a toothless tiger, and ‘out of step’ with otherwise uniform capping legislation nationally. As a result, only one scheme was ever registered in Tasmania.

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Litigation funders and contingency fees under the spotlight in Victoria

0sarah_fountainOn Monday, it was announced that the Victorian Attorney-General, the Hon Martin Pakula MP, has asked the Victorian Law Reform Commission (VLRC) to review the rules covering litigation funders to prevent unfair conduct in civil proceedings, such as class actions.

The review by the VLRC will consider issues such as:

  • circumstances where a successful outcome is eroded by fees, leaving plaintiffs with nothing (or next to nothing), despite winning;
  • whether some third parties are unfairly profiting from successful actions;
  • the existing prohibition on law firms charging contingency fees and whether that prohibition should be retained.

In announcing the review, the Attorney-General commented, ‘It is incredibly frustrating when a person wins a case, only to walk away almost empty-handed because the money has been soaked up by unfair legal fees. …. The days of some litigation funders charging such excessive fees need to come to an end.

The VLRC is required to provide its report to the Government by 30 March 2018. As part of its review, the VLRC will consider submissions from interested parties. Actions funded by litigation funders can have a significant impact on many parties, particularly insurers, and insurers are therefore encouraged to have their voice heard by making submissions to the VLRC.  If you would like assistance in preparing submissions, please contact David Leggatt on +61 3 9274 5473.

Finding dirt in the cloud?

natasha_stojanovichA recent Supreme Court decision has ‘opened the door’ to litigants seeking discovery of supposedly ‘deleted’ electronic material in the Cloud.

The decision concerned a dispute about discovery in a defamation proceeding. It all turned on seeking access to text messages which had been deleted from the plaintiff’s i-Phone. The plaintiff said his i-Phone had been damaged, back-ups deleted, and was therefore unable to discover relevant text messages. As no backed up copies of the text messages were available – on his personal computer or Apple iCloud account – the plaintiff said he could do no more to provide the text messages. Read the rest of this entry »

Section 6 – destined for change?

0chris_LisicaThe NSW Law Reform Commission has just released Report 143, which recommends a replacement provision for section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW).

Section 6 provides an avenue for a plaintiff to recover damages or compensation directly from the defendant’s insurer, in certain circumstances. The section also provides for a plaintiff to assert a ‘statutory charge’ over all insurance moneys which may become payable under the insurance contract as a result of the defendant’s liability to the plaintiff. This arrangement has caused headaches in the past, which are well known in the industry. Read the rest of this entry »

ASIC releases world-first fintech licensing exemption

1202398876_1_AUGroups(Alex_Samson_lr_Brisbane)The Australian Securities and Investments Commission (ASIC) has released class waivers which will allow eligible financial technology (fintech) businesses to test certain products and services without needing to obtain an Australian financial services licence or credit licence. ASIC has stated that this exemption is unique, with no other major jurisdiction having implemented a class waiver which allows eligible businesses to notify the regulator and commence testing without an individual application process.

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Discovering the future

james.morse_clrTechnology assisted document review (TAR) has been ordered for the first time in Australia by the Victorian Supreme Court. Given the large number of documents being created every day and the need to deal with cases at proportionate cost, it was inevitable that Australian courts would follow the US, UK and Irish courts by endorsing TAR in appropriate cases.

The recent judgment in McConnell Dowell Constructors (Aust) Pty Ltd v Santam Ltd & Ors (No 1) [2016] VSC 734 ordering parties to employ TAR means potentially altering the discovery process and lowering litigation costs arising from document review in large document cases if in the future TAR is more readily permitted in litigation.

Click here to read the full article.

To walk away or not to walk away – what is a genuine offer to compromise?

Belinda_RandallAustralian Courts in 3 different jurisdictions have recently considered the issue of whether an offer of settlement was ‘a genuine compromise’ warranting an order for indemnity costs. The results in each case demonstrate the factors that a Court will weigh up in determining an entitlement (or otherwise) to indemnity costs. Insurers and their advisors should be aware of these factors before making walk away offers (and offers of compromise) in litigated proceedings, to ensure that maximum costs protection is obtained in the circumstances of each particular case. Read the rest of this entry »

Qld Court confirms position on vicarious liability

Kristie SwainstonOn 29 November 2016, Judge Dorney of the Queensland District Court handed down his decision in House v Anglo Coal (Callide Management) Pty Ltd & Anor [2016] QDC 303. The plaintiff, Glynn House, was injured when a tipper truck he was driving collided with the rear of another truck on a mine haul road. The plaintiff sued his employer, Workpac Pty Ltd, and Anglo Coal (Callide Management) Pty Ltd, with which his employer had contracted for the hire of the plaintiff’s labouring services at the mine site (which was owned and operated by Anglo Coal).

It was accepted by Anlgo Coal that it owed duties of an employer due to the relationship of proximity and the degree to which it controlled the system of work. Consequently, Anglo Coal was required to exercise reasonable care to avoid unnecessary risks of injury arising out of the ongoing conduct of its operations while it was performing its work. Nonetheless, Anglo Coal was entitled to expect that the plaintiff would exercise care in carrying out straight forward activities, of which Judge Dorney considered that driving a truck in dry conditions on a straight stretch of road in circumstances where the plaintiff had done so countless times before qualified as a straight forward activity.

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