Consumers should be given the right to take action against life insurers for any breaches of the Financial Services Council’s (FSC’s) life insurer code of conduct, according to the Australian Securities and Investments Commission (ASIC).
The regulator has used its submission responding to the latest hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry to cite the need for consumers to have legal recourse for code breaches.
Referring to the conduct of life insurers with respect to dealing with people in remote and indigenous communities, ASIC noted that the code of conduct only applied to signatory life insurers and only obliged the insurers to commit to taking reasonable measures.
“Strengthening specific obligations to address the risk of poor consumer outcomes from unfair sales practices would need to be included in order to meaningfully protect indigenous consumers form poor sales practices,” ASIC said.
“The life insurance industry also has an opportunity to implement the design and distribution obligations by including concrete provisions in the code that address the concerns that ASIC has raised,” it said.
“Further, the code should also give consumers the right to take action for code breaches,” the ASIC submission said.
Elsewhere in its submission, ASIC urged that funeral expenses insurance be deemed a financial product for the purposes of Chapter 7 of the Corporations Act.
It said that if this occurred, providers would be required to hold an Australian Financial Services License and be bound by the provisions of the act to ensure that the financial services were provided efficiently, honestly and fairly.