ASIC initiates public consultation on IDR standards

ASIC has initiated public consultation on new standards in relation to the handling of consumer and small business complaints. The consultation covers the proposed updates to ASIC’s IDR standards (currently set out in Regulatory Guide 165 Licensing: Internal and external dispute resolution) and a proposed framework for mandatory IDR data reporting by financial firms to ASIC.

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Plans unveiled for claims handling reform

Ann-Marie_ColemanThe Government has released a consultation paper in response to the recommendation from the Financial Services Royal Commission that claims handling should no longer be excluded from the definition of ‘financial service’.

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What makes an insurance contract?

In The Owners – Units Plan No. 3115 v The Trustees of the Master Builders Fidelity Fund Scheme [2019] FCA 115, the Federal Court (Griffth J) considered, inter alia, whether fidelity certificates issued under a fidelity scheme approved pursuant to the Building Act 2004 (ACT) are contracts of insurance for the purposes of the Insurance Contracts Act 1984 (Cth). It concluded they were not, even though they covered the same risks as those covered under a residential building work insurance policy.

Claims upon the fidelity scheme were not brought within the time prescribed by the scheme and the Applicant attempted to circumvent that issue by asserting reliance on s 54(1) of the Insurance Contracts Act 1984 (Cth) (IC Act). Read the rest of this entry »

Stronger penalties for corporate misconduct to be introduced

Ann-Marie_ColemanThe Treasury Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018 (Bill), which introduces stronger penalties for corporate and financial sector misconduct, has been passed by the Senate. The Bill implements recommendations of the ASIC Enforcement Review Taskforce and will amend the Corporations Act, ASIC Act, National Consumer Credit Protection Act (and Credit Code) and the Insurance Contracts Act. While the Bill still needs to be formally approved by the House of Representatives, this is seen as a formality only. Read the rest of this entry »

ASIC focuses in on IDR processes

Ann-Marie_ColemanASIC has released research exploring the customer experience of internal dispute resolution (IDR) procedures in the financial services sector. Financial services licensees have specific obligations around maintaining an IDR procedure.

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Life Insurance Code 2.0

Ann-Marie_ColemanThe Financial Services Council has released a draft of the new Life Insurance Code of Practice (Code) for public consultation. This follows scrutiny of the industry, including sales and claims practices, during the round 6 hearings at the Financial Services Royal Commission.

The draft Code builds on the existing code and is designed to lift standards in product design, sales, underwriting, customer service, complaints and claims handling. Chapter 1 places obligations on life insurance companies and Chapter 2 places obligations on superannuation trustees where life insurance is in superannuation. Read the rest of this entry »

ASIC proposes updates to organisational competence requirements for advice licensees

Ann-Marie_ColemanASIC has proposed updates to Regulatory Guide 105 Licensing: Organisational competence (RG 105) that would see advice licensees required to have a responsible manager (RM) that meets a new Option 6 knowledge and skills requirement. Consultation Paper 305, released yesterday by ASIC, includes updates designed to support the professional standards reforms, which aim to lift the education, training and ethical standards in the financial advice industry.

For the purpose of the Consultation Paper, ‘advice licensees’ are licensees who provide personal advice to retail clients in relation to financial products other than basic banking products, general insurance products and consumer credit insurance. This means licensees who provide personal advice in relation to life insurance products will be captured by the proposal. Read the rest of this entry »

New mandatory reporting requirements on life insurance claims

Ann-Marie_ColemanThe Australian Prudential Regulation Authority (APRA) has released the Life Insurance Reporting Standard LRS 750 Claims and Disputes with the aim of enhancing the consistency and quality of life insurance data. The data will be published through a program established jointly last year by APRA and the Australian Securities and Investments Commission (ASIC).

With the introduction of the new reporting standard, it is now mandatory for life insurers to report data on claims and disputes. APRA and ASIC have published data in the past on life insurance and claims, however, participation was not mandatory an insurers did not interpret the reporting requirements consistently. It is hoped that the new reporting standard delivers enhanced transparency and accountability which will assist consumers in making informed decisions about their life insurance. It is also hoped that the new standard will help regulators to identify emerging problems, assess product value and take action to improve consumer outcomes. Read the rest of this entry »

ASIC corporate plan – what’s on the horizon for insurance

Ann-Marie_ColemanASIC has published its Corporate Plan for 2018-2022. The plan articulates the regulatory actions ASIC proposes to take over 2018-2019.

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ASIC reviews insurance cover through superannuation

Ann-Marie_ColemanFollowing the release of its report into direct life insurance (see our blog entry on that here), ASIC has also released a report on the provision of insurance cover through superannuation (Report 591). Generally, superannuation funds offer their members one or more types of life insurance (such as life cover, TPD cover and income protection cover). 70% of all life insurance policies in Australia are held through superannuation funds.

ASIC’s review of 47 superannuation trustees focused on the following:

  • Insurance claims and complaints handling.
  • Disclosures about insurance (including about cover ceasing).
  • Insurer rebates paid to trustees.
  • Whether members were defaulted into demographic categories that resulted in higher premiums.

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