Home / Life Insurance / Planners want Privacy Act to apply to all financial services firms
14 December 2020
Every financial services firm should be made to comply with the Privacy Act, the Financial Planning Association (FPA) says in a submission to an issues paper from the Attorney-General’s Department.
The recommendation of a financial product should not be the determining factor in whether the legislation applies.
At present financial planners are largely subject to the Privacy Act even if they have less than $3 million in annual turnover.
They do not enjoy the small business exemption – which refers to entities with under $3 million in yearly revenue – as they are generally classified as “reporting entities” under Section 6 of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006.
“Of the 54 items in that definition [of reporting entities], most relate to the act of providing or arranging a financial product,” the FPA said. “A business that does not hold an Australian Financial Service licence and/or does not arrange a financial product will not be caught by this definition.
“There are a range of financial services businesses that may fall outside this definition, including financial planners who provide only strategic advice (which does not involve a financial product recommendation), and financial or money coaches.
“The FPA considers it is appropriate for all businesses that collect personal information in order to provide a professional service - whether this is financial advice, strategic advice or financial coaching - to be subject to the Privacy Act framework.”
It says a standardised framework of notice, such as standard words or icons, would be beneficial in helping consumers understand how entities are using their personal information.
Such a notice would ensure that disclosures are made in plain language that is focused on consumer understanding rather than addressing compliance risks for the organisation. It would also promote a broader understanding of privacy issues in the community and provide a common language that improves the effectiveness of the disclosure system as a whole.
Consumer advocates have also made a submission to the issues paper, which is seeking feedback on whether the scope of the legislation and its enforcement mechanisms remain fit for purpose in today’s digital economy.
The joint submission – from the Financial Rights Legal Centre, Consumer Action Law Centre and Financial Counselling Australia – wants measures to restrict, limit or prohibit certain uses and disclosures related to the collection of genetic test results.
They say the stronger privacy safeguards for genetic test results must be a requirement for providing goods and services or entering into life insurance contract.
“We have called out life insurers because the use of genomic information is a clear and well- known case where misuse and abuse needs to be looked at very closely,” Financial Rights Legal Centre Policy and Advocacy Officer Drew MacRae told insuranceNEWS.com.au.