The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, which was introduced in mid-November, passed Parliament on Thursday.
The bill addresses 20 of 76 final recommendations from the royal commission report, including tougher anti-hawking provisions for super and insurance products, prohibiting super trustees from having a duty to act in the interests of a person other than those arising from their duties as trustee, and allowing provisions in financial services industry codes to be enforceable.
Breaches of codes such as the FSC life insurance code of practice are now expected to attract civil penalties under the new laws.
Insurance Council chief executive Andrew Hall said the move to make such codes more enforceable would “improve consumer confidence in the value and utility of insurance”.
The bill also included provisions to classify insurance claims handling as a financial service, which attracted confusion from the advice industry earlier this month as ASIC guidance appeared to state the change would require an additional licence authorisation for risk advisers.
Forthcoming regulations that relate to the legislation are now expected to contain an exemption for advisers, AFA chief executive Phil Kewin told ifa last week.
Financial Rights Legal Centre chief executive Karen Cox said the claims handling reforms were important to ensure proper regulatory oversight of insurer practices around claims handling.
“A significant percentage of complaints to Financial Rights Insurance Law Service concerns basic claims handling issues such as delays, unfair reliance on exclusions, refusal to supply copies of evidence relied on, and fishing expeditions seeking unreasonable and sometimes irrelevant evidence from their customers,” Ms Cox said.
“These longstanding problems have festered because regulators have been unable to oversee these activities. We believe the royal commission reforms will lead to better practices and fewer complaints.”
