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Proposed life code changes 'not enough': consumer advocates

Consumer advocates say they have many concerns over proposed updates to the Life Insurance Code of Practice in a joint submission to the Financial Services Council (FSC).

The Financial Rights Legal Centre, Consumer Action Law Centre and Redfern Legal Centre made 33 recommendations in the submission, covering concerns relating to mental health provisions, medical definitions, medical examinations and pre-existing conditions, claims and complaints timeframes.

The proposals also address financial and legal advice, pressure selling, financial hardship, family violence, vulnerability, funeral insurance and consumer credit insurance, and investigations, interviews and surveillance.

“In short there remains a lot to be desired in the latest draft of the life code,” Financial Rights Legal Centre Senior Policy and Advocacy Officer Drew MacRae told

“There may be a small number of additional commitments here and there but there are some significant backward steps on areas like mental health, claims and complaints timeframes, and product design and distribution standards.

“All in all, pretty disappointing in the lead up to enforceability.”

On mental health, the consumer advocates say they disagree with the FSC’s position that “the code should not restate existing obligations in legislation”. They say the commitment must be restored.

“This position is misleading and self-serving,” they said in the submission. “Restating the law is required for clarity and sense and is acknowledged by the FSC as such since reference to and restating of the law is done so in other areas of the proposed draft code.”

In relation to medical definitions, the submission says FSC needs to “expand upon” the limited number of medical definitions in the code.

There have been no new standard medical definitions added despite a commitment from the FSC to investigate further standardisation, according to the submission.

The submission says code subscribers need to consult independent medical experts when updating definitions and that the changes, if any, must be applied to legacy life products.

On claims and complaints timeframes, written decisions need to be provided within 10 business days and the ability for insurers to extend the deadline by including additional steps should be removed.

Additionally, complainants should be provided with final decisions, not simply responses that can be reopened at any time by a life insurer, the submission says.

The independent Life Code Compliance Committee also raised concerns about some of the proposed changes, saying some of its prior feedback was not reflected in the draft version.

These include the suggestion to amend the obligation to review medical definitions to capture off-sale policies and the proposal for the committee to have authority to publish determinations about individual subscribers on an identified basis.

The proposed changes to the life code are the first since the FSC launched it on June 30 2016, with a one-year transition for subscribers. Consultation on the draft version closed last week.

Click here for more from the submission.