The news follows the passage of the government’s first tranche of royal commission legislation through Parliament late last year, which included the requirement for licensees dealing with insurance claims to apply for a variation to their AFSL.
The government released draft regulations around claimant intermediaries in December, which specifies that advisers are to be exempt from the definition of “claimant intermediaries” under the laws.
The regulations specify that the term “financial adviser” under the exemption means someone who “holds an AFSL that authorises the adviser to provide financial product advice … and provides personal advice to a person as a retail client … and the adviser represents the person in pursuing a claim under an insurance product”.
In a recent communication to members, the AFA pointed out that advisers and their staff in a number of situations would not fall under the definitions of the exemption, meaning amendments needed to be made to the final regulations to remove the need for any advice firms to seek a licence variation.
“The exemption needs to include all financial advisers, including those who are individually licensed, representatives and also authorised representatives,” the AFA said.
“The exemption [also] needs to cover not only the financial adviser, but also any staff members who assist the adviser in providing claims handling support and guidance.
Further, given that advisers needed to have provided personal advice to a client prior to the claim to be covered by the exemption, the association said the regulations needed to be amended to include advisers who may be assisting new clients, or those who may not typically provide personal advice, such as corporate super advisers.
“As we have said previously, we do not believe that financial advisers are the intended focus of this claims handling legislation and should be exempt from this new provision,” the AFA said.
“We are pleased that the government intends to provide an exemption. We just need to ensure that it is comprehensive and delivers a workable model.”
AFA is right to push for an exemption but from my AFSL’s perspective we will be applying to vary our license to provide documentation outlining our capabilities in claims management.
Many practices do not take this important area seriously and simply flick the client to the insurer then duck and weave.
I think it’s perfectly reasonable to have a formal policy in place to manage claims and then to live by that policy. Being there at claims time is by far and away the most important thing we do for our clients after recommending they have cover. It’s a sad but rewarding time.
I reckon the only carve out here is ambulance chasing lawyers looking to rid themselves of competition.