Financial advisers have been named by the Australian Securities and Investments Commission (ASIC) as industry participants who will need to get an appropriate Australian Financial Services License (AFSL) for insurance claims handling and settling or be authorised under another appropriate AFSL.
Draft information issued by ASIC also suggests that lawyers may also need to be covered by an AFSL in circumstances where they are representing people in pursuing an insurance claim.
What is more, licensees will need to move quickly to get their AFSLs varied to comply with the new arrangements.
Releasing a draft information sheet on insurance claims handling, the regulator nominated the following list of industry participants requiring coverage under an AFSL:
- Insurance claims managers;
- Tradespersons (referred to as ‘insurance fulfilment providers’) who can reject claims on behalf of an insurer;
- Insurance brokers who handle claims on behalf of an insurer;
- Financial advisers who handle claims on behalf of an insurer; and
- People that carry on a business of representing people to pursue insurance claims for reward (referred to as ‘claimant intermediaries’).
The ASIC information sheet has been developed following the introduction of the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 into Parliament earlier this month.
The regulator said that entities that already hold an AFS licence will need to apply for a variation to their licence so it covers the new financial service of claims handling and settling.
ASIC said it expected to start taking applications for AFS licences, and variations to existing licences, from 1 January, 2021 (subject to the Bill’s passage before the end of this year).
“Applicants are strongly encouraged to submit their applications as soon as possible because:
- During the transition period between 1 July, 2021, and 31 December, 2021, claims handing and settling services can only be provided if a complete application was lodged by 30 June 2021, and it has either been granted or is still pending; and
- From 1 January, 2022 claims handling and settling services can only be provided if the application has been granted.”