APRA puts funds on notice over insurance code

Superannuation funds have been sent a clear message that the Government and the regulators believe the insurance inside superannuation code of conduct does not go far enough in terms of enforceability.

The message was delivered by Australian Prudential Regulation Authority (APRA) deputy chair, Helen Rowell who used an address to the Law Council of Australia to make clear the package delivered by the Insurance Inside Superannuation Working Group (ISWG) represented only a starting point.

What is more the regulator made it clear it wants superannuation funds to adopt the code as early as possible and not hide behind what APRA considered a “relatively lengthy timeline”.

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In doing, Rowell appears to have reflected the concerns of the Minister for Revenue and Financial Services, Kelly O’Dwyer about both the voluntary nature of code compliance and the long implementation timeline.

Rowell said that APRA welcomed the code as an important first step but added that “there is more to do, both to strength the enforceability and oversight of the Code and also to tackle some of the areas that the current Code has not fully addressed”.

“APRA therefore encourages all trustees to consider adopting the Code, and to review their insurance arrangements against its provisions – and where possible to do so more quickly than envisaged by the relatively lengthy timeline for implementation,” she said. “We would also encourage you to think about where you should go further than the minimum provisions set out in the Code, with a view to further enhancing the outcomes being delivered to members.”

Rowell said there was clearly potential for future, improved iterations of the Code, building upon the work done so far and APRA looked forward to seeing the industry commit to tackling the challenge.

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APRA has been asleep at the wheel for too long as the ISA happily collect higher commissions and referral fees whilst members lose insurance benefits, conditions and entitlements.

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