Clicky

FSC looks to extend code to all “distributors”

The Financial Services Council (FSC) has moved to extend its insurance code of conduct to what it describes as “all life insurance distributors”.

At the same time, it wants the code to be binding on superannuation fund trustees.

The FSC announced a “radical overhaul” of the code today and initiated a process of public consultation stating that the move built upon the original 2017 code and was designed to lift standards in product design, sales, underwriting, customer service, complaints and claims handling.

Related News:

It said that there were more than 30 significant changes to the code and that it was intended to take effect from next July.

Commenting on the code changes, FSC chief executive, Sally Loane, said every aspect of the life insurance industry was under the microscope following the poor behaviour brought to light during the Royal Commission.

“We owe it to consumers to do a better job,” she said. “Today with the release of the consultation draft of the second iteration of the Code the life insurance industry is demonstrating it is serious about improving products, practices and governance to rebuild the standing of the sector.”

The author of the majority of the proposed changes affecting life insurers, FSC senior policy manager Nick Kirwan said the FSC had been working with ASIC and consumer advocates, and has met with mental health groups, GPs and geneticists during the past 18 months to develop the new draft Code.

Proposed changes to the new Code include:

  • Banning pressure selling of products and coercive retention tactics;
  • Banning medical disclosure checking without reasonable grounds;
  • Ensuring customers are no better or worse off at claim time (excluding fraud);
  • Improving funeral insurance to ensure people understand what they are buying;
  • Separating consumer credit insurance (CCI) from credit product sales;
  • Binding trustees of Superannuation funds to the Code; and
  • Extending coverage of the Code to include all life insurance distributors.

Reforms to underwriting, claims and mental health, including:

  • Taking individual circumstances of mental health conditions (including history and severity) into account in underwriting;
  • Including people with a mental health condition as “vulnerable”;
  • Greater protection for customers during claims interviews;
  • Plain language explanations of the reasons for non-standard terms, such as exclusions; and
  • Clearer questions on application forms.

 




Related Content

Victorian financial planner permanently banned

The Australian Securities and Investments Commission (ASIC) has permanently banned Victorian financial planner, Ahmed Saad of Glenroy, from providing ...Read more

FSC looks to extend code to all “distributors”

The Financial Services Council (FSC) has moved to extend its insurance code of conduct to what it describes as “all life insurance distributors”.A...Read more

RC probes causes of misconduct

Two of the big four banks, Macquarie Group and the Australian Securities and Investments Commission (ASIC) will be in the spotlight as the Royal Commi...Read more

Author

Comments

Comments

Yawn. Sally Loane couldn't answer simple questions at the RC. Yawn the code of practice is practically worthless. Yawn even the members who have signed up to it breach it. Yawn no penalties if they breach it. Yawn waste of time rolling it out in that case. Yawn when the FSC say anything these days. They are a proven useless organisation just out to lobby for more profit for their members by any dodgy means necessary. Time to close up shop FSC yawn.

Add new comment