THE HON JOSH FRYDENBERG MP
29 November 2019
TAKING ACTION ON THE BANKING, SUPERANNUATION & FINANCIAL SERVICES INDUSTRY ROYAL COMMISSION – CONSULTATION ON CLAIMS HANDLING LEGISLATION
The Morrison Government has today released for consultation draft legislation and regulations to put an end to inappropriate insurance claims handling practices. The draft laws remove the current exclusion of claims handling and settlement from the definition of financial services and ensure insurance claims handling and settlement is subject to appropriate oversight by the Australian Securities and Investments Commission (ASIC).
The draft legislation implements recommendation 4.8 in the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services and follows a consultation paper released by the Government earlier this year.
In our response to the Final Report, the Government recognised that inappropriate claims handling practices can cause significant consumer detriment as highlighted through the Royal Commission’s round six hearings into insurance.
In his Final Report, Commissioner Hayne recommended “that the Corporations Regulations be amended, so that the handling or settlement of insurance claims, or potential insurance claims, is no longer excluded from the definition of ‘financial service’”.
These changes will require claims handling and settlement services to be treated like any other financial services, needing to be provided efficiently, honestly and fairly. They will enhance consumer protection and encourage greater confidence in the value of insurance products.
Treating insurance claims handling as a financial service under the Corporations Act will allow ASIC to enforce a higher standard of behaviour in the industry and provide consumers with greater confidence that their insurance claims will be properly assessed.
The Government is taking action on all 76 recommendations contained in the Final Report of the Royal Commission. Restoring trust in Australia’s financial system is part of the Morrison Government’s plan for a stronger economy.
The exposure draft legislation and regulations are available on the Treasury website.