The Insurance Council of Australia has urged caution on a plan to publicly name companies that fail to comply with ombudsman dispute determinations.

The Australian Financial Complaints Authority is proposing the rule change to increase transparency and provide fairness to other members of the service.

But ICA says legitimate issues beyond a company’s control may hamper compliance and it is seeking clarity on the value publication would provide to the public, and how information would be presented.

“We believe that contextualisation will be crucial to recognise the various circumstances that can lead to financial firms failing to comply with a determination,” it says in a submission.

“The information presented ... should be done in a way which users can interpret appropriately, to avoid any risk of misinterpretation by users such as consumers and media.”

ICA proposes distinguishing between companies refusing to comply and those that are unable to, providing context on business size and delineating between inconveniences and significant harm. It also suggests engaging with the industry before publication.

AFCA says failure to comply with rulings is a serious breach and instances are reported to the Australian Securities and Investments Commission. It referred 64 companies between April 1 last year and March 31 this year.

The ombudsman has also proposed tightening rules applying to paid representatives appointed by claimants.

This would enable the dispute body to stop handling a complaint if a representative is not a member of AFCA, where that is required by their financial services licence.

ICA says it is “crucial to ensure that licensing obligations are adhered to and we strongly support AFCA’s proposal”.

The changes would also allow the ombudsman to stop considering a complaint if the representative “unreasonably fails” to use required communication channels.

AFCA can already respond when a representative is acting unreasonably or not in a complainant’s best interests.

ICA suggests publishing details of such representatives, to help consumers avoid “entering into potentially problematic agreements in the future that may cause them detriment”. 

The National Insurance Brokers Association, in its submission, supports AFCA publishing details of companies failing to comply and backs changes related to paid representatives.

The proposed rule changes require ASIC approval. ICA’s submission is available here. 

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