Claims handling exemption talks on hold
A Treasury consultation on removing a claims handling exclusion from the financial services definition in the Corporations Act has been overtaken by the Hayne royal commission.
A spokesman says work on the issue is on hold due to an “overlap with the remit” of the royal commission, due to deliver its final report by February 1.
Commission Counsel Assisting Rowena Orr has raised the issue often during hearings, noting requirements to provide financial services efficiently, honestly and fairly do not extend to claims, limiting the ability of the Australian Securities and Investments Commission (ASIC) to act.
Insurance Council of Australia CEO Rob Whelan says ICA has an open mind on ending the exclusion, but Financial Services Council CEO Sally Loane says the carve-out helps claims staff provide assistance to policyholders and should remain.
“If they strayed into an area that could be perceived as personal advice, they would not be able to give that advice,” she said. “They shouldn’t be in the same category as a financial adviser.”
Suncorp Insurance CEO Gary Dransfield says he is open to a change if it improves consumer outcomes, but there may be unintended consequences for claimants.
“It would be unfortunate if we were not able to have an open conversation with a customer about their particular circumstance in lodging that claim,” he said.
Former revenue and financial services minister Kelly O’Dwyer asked Treasury two years ago to complete a “targeted consultation” on removing the exemption, after ASIC recommended the change in its report on life insurance industry claims handling.