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Hayne reform package enters Parliament

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Legislation covering Hayne royal commission recommendations for add-on sales, hawking and claims handling has been introduced into Federal Parliament today as part of a broader package which provides more detail around the reforms.

Documents tabled show the deferred sales model for add-on insurance products and the anti-hawking laws are proposed to take effect from October 5 while the bill outlines arrangements for the claims handling changes.

Insurance Council of Australia (ICA) CEO Andrew Hall says insurers fully support the intention of the Hayne recommendations, and recognise the importance of the legislation, and will work closely with the Government to ensure reforms can be implemented effectively.

“Insurers have been preparing for implementation since the draft bill was released in January, and today’s bill provides the details needed by businesses to adjust their operations,” he said.

ICA says concerns about the potential negative impact of some provisions in the original draft legislation have been considered, while still being consistent with the policy intent of the Hayne proposals.

There is greater clarity about how hawking prohibitions will be strengthened, and more certainty over the application of claims handling obligations to service providers, it says.

Treasurer Josh Frydenberg says the legislative package covers 20 recommendations and one additional commitment from the royal commission.

“These changes will be complemented by providing further clarity regarding the role of the regulators and enhancing the requirements of financial institutions reporting breaches of the law, which will ensure significant misconduct is reported and investigated sooner,” he said.

The Government is now focused on implementing remaining Hayne recommendations, consistent with an updated roadmap issued following the onset of COVID-19, Mr Frydenberg says.

Consumer groups backed the Federal Government’s introduction of stronger protections, but said deep concerns remain.

“Cold-calling people to sell low-value insurance or bundling junk products in a hard sell should now be stamped out,” Consumer Action CEO Gerard Brody said.

The groups say there are concerns about a potential exemption for travel insurance from some of the reforms, which would leave people open to “unscrupulous” sales tactics and being sold unsuitable products, cementing problems seen as a result of the COVID-19 crisis.