Advisers and lawyers impacted by new claims handling licensing

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.

Related News:

Releasing a draft information sheet on insurance claims handling, the regulator nominated the following list of industry participants requiring coverage under an AFSL:

  • Insurers;
  • 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.”



Recommended for you

Comments

Comments

hmmm..." if you can't handle an insurance claim, then this reduces the need for ongoing commission, so the ongoing comission should be reduced or eliminated"
Another dagger in that model of remuneration

ASIC want more people to get Advice =
More BS REGS
More BS Costs
More BS Compliance
ASIC you truely are the most moronic bunch of Canberra Bubble bureaucrats with zero real world idea.
So Advisers can recommend and Advise on Life Insurance. But god forbid the clients need to claim and the same Advisers won’t be able to help the clients get the claim. WITHOUT MORE BS RED TAPE REVS AND COSTS.
Just so freaking over these ASIC morons !!!!

More red tape... add it to the list.

this is nothing, wait till they get the feedback from their survey about scaled advice and cost of advice.

there will be at least 6 new forms they will introduce.

i just love forms. i am good at completing them.

why this becoming a joke so i can recommend insurance but can longer assist client lodging a claim, just cannot work this one out

I swear ASIC would ban us from bringing in our neighbour's bins after the truck has gone by if they could.

How insane. Yet another example of interference by those who have no clue. Thankfully we disposed of our $350k recurring insurance book a few years ago when we read the writing on the wall, however just a year ago we finalised a 2 year battle with two insurers for a client with TPD for $750k and $1mill. Filenotes that literally ran to hundreds of pages from the constant work and follow up, especially as both groups changed case managers bimonthly. All this done not for any set fee but because they were a client of ours (&still are now on the investment side).
Throwing yet another restriction and licensing requirements simply means less clients in need getting the appropriate assistance and the insurers getting away with ripping off more consumers.

ASIC are either intentionally out to destroy financial planning and especially insurance advisers, or simply inept or utterly corrupt - as recent events with Shipton, Crennan and the parliamentary inquiry appear to show.

Mike
Please clarify. My understanding is this is not intended to apply to an adviser assisting their client with a claim.

That is, it is intended to ensure anyone else but an adviser assisting their client is now caught in the net as well and that ASIC is aware of the type of services being engaged in. Advisers already being responsible to ASIC for advising clients are already covered.

Please clarify it my, and others, expectations are wrong.

You are just about right. Why people and newspapers jump up and down without reading the full story I'll never know. It is important that the licensing only applies to the operation of an 'Insurance Claims Handling Business'. That businesses is defined and so is when a financial planner is captured by the requirement. Read ASICs publication ‘Claims handling and settling: How to comply with your AFS licence obligations'. A Financial Adviser is only caught if they 'provide financial product advice to an insured person (including one who is a third-party beneficiary) and provide a claims handling and settling service on behalf of the insurer'.

The action/process of making a claim, negotiating etc is from 1 July 2021 considered to be a new class of "financial product". In the same way your AFSL has for example, superannuation, manged investment, derivatives listed you'll need to update and get the new category “claims handling and settling service” added.

Do you do it ‘on behalf of an insurance company’.?That means does the insurer outsource the claim settlement process to you and then pays you for that service? If so, your are caught. If this is not the case you are not caught.

Scrap my last comment....nothing positive to see here. Lawyers are exempt. Go figure...How many millions of dollars have been transfered from clients to lawyers for the completion of standard claims forms that have not even been denied by the insurer in the first place?

there is no way liars (pronounced lawyers) will comply with this. they will reject it.

"People that carry on a business of representing people to pursue insurance claims for reward (referred to as ‘claimant intermediaries’)" would I assume cover parasite lawyers taking 40% for simple claims and could be good news for advisers who can step in and do a better, cheaper job. As for advisers we are already required to be under an AFSL so I'm not sure why this would not be a bad thing??

ASIC a week ago: "So, advisers, we're stumped - why is advice so goshdarned expensive? Tell us how roboadvice will fix all ills. Thanks, bye."

ASIC this week: "Burn it all down."

All those thinking that this will cover Lawyers - think again! The legislation specifically provides an exemption for "professional legal services provided by a lawyer in a professional capacity" (Section 911A(2)(en)). Mike seems to have not read the draft info but simply cut and paste from the press release and come up with an article title that will have us clicking through in hope!

Please note that Lawyers have there own carve out in this legislation, which really comes as no surprise.

Add new comment