Federal Opposition warns on higher compliance costs
The Coalition believes there will be increased compliance costs in keeping the general insurance industry under both state and federal administration.
Federal Shadow Minister for Financial Services Chris Pearce said a system regulated by the Australian Prudential Regulation Authority (APRA) and the states is no longer necessary.
“Undue compliance costs and overlapping would most likely be eradicated and state-based insurance monopolies could be expected to disappear,” he said, speaking at an Insurance Council of Australia conference in Sydney.
“Last year the Council of Australian Governments announced measures which will allow the Commonwealth Government to assume responsibility for the regulation of most remaining unlicensed or state-licensed financial services products.”
Under the extension of the Uniform Credit Code, mortgage broking, margin lending and non-deposit lending institutions as well as remaining areas of consumer credit will be moved to Commonwealth jurisdiction.
“The Government announced plans to institute this change by July 1 this year.
“At this stage, we are yet to see an exposure draft or get an indication of how this announcement will translate into practical application.”
Pearce said the Coalition supports these measures in principle as a natural extension of the licensing regime established after the Wallis Inquiry.
“It is interesting to note that if these aforementioned financial services sectors are brought under the federal wing, the insurance sector will remain the only sector within financial services operating under both state and federal supervision,” he said.
“The Coalition is acutely aware of this newly created distinction between insurance and other financial services products.”
Pearce said the Coalition does not see the general insurance regulatory regime as broken or in disrepair.
“Our insurance industry is in good shape, largely as a result of our world-class regulatory structures,” he said.
“There is no justification for radical regulatory reform in the insurance sector.”
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