Powered by MOMENTUM MEDIA
moneymanagement logo
 
 

FSC faces questioning on enforceability of Code of Practice

FSC/financial-services-council/Sally-Loane/Royal-Commission/life/risk/insurance/Rowena-Orr/

21 September 2018
| By Hannah Wootton |
image
image image
expand image

The Royal Commission has raised the issue of the enforceability of the life insurance code of practice, with Financial Services Council chief executive, Sally Loane, today facing tough questions on whether the code is merely “aspirational”.

Loane said that the FSC did not have a “fully formed view” on whether the terms of its life insurance code should be incorporated into legally enforceable life insurance contracts, admitting that the Code at this point was “aspirational”.

When asked by an incredulous Senior Counsel assisting the Commission, Rowena Orr QC, what the use of “aspirational statements in a document like this were”, Loane spoke of the “granularity” of the Code.

Loane nonetheless remained confident that the FSC Code of Practice for the life insurance industry was enforceable, saying that insurers were liable through the Life Code Compliance Committee administered through the Financial Ombudsman Service.

She later had to admit that the Committee was yet to apply any sanctions to companies under the Code.

Despite the general insurance industry having a code of practice in place since the mid-1990s, the life insurance industry did not until two decades later, and even then, the change only came about because of strong recommendations in the Towbridge Report.

When asked by Orr why the life/risk industry had not had a Code earlier, Loane was unable to give a reason. She did however say that it “quite possibly” should have, before, after further questioning by Orr, admitting that it actually should have.

Loane maintained however, that the industry should retain the carve-outs it currently enjoys from the Corporations Act’s section 192, which provided for honest, efficient and fair action from companies, and from having a statutory obligation imposed to ensure that staff are adequately trained and competent.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

The succession dilemma is more than just a matter of commitments.This isn’t simply about younger vs. older advisers. It’...

1 week 1 day ago

Significant ethical issues there. If a relationship is in the process of breaking down then both parties are likely to b...

1 month ago

It's not licensees not putting them on, it's small businesses (that are licensed) that cannot afford to put them on. The...

1 month 1 week ago

ASIC has released the results of the latest adviser exam, with August’s pass mark improving on the sitting from a year ago. ...

1 week 4 days ago

The inquiry into the collapse of Dixon Advisory and broader wealth management companies by the Senate economics references committee will not be re-adopted. ...

2 weeks 4 days ago

While the profession continues to see consolidation at the top, Adviser Ratings has compared the business models of Insignia and Entireti and how they are shaping the pro...

2 weeks 6 days ago

TOP PERFORMING FUNDS

ACS FIXED INT - AUSTRALIA/GLOBAL BOND