FSC resists unfair contracts extension

Extending the Unfair Contract Terms (UCT) legislation to the life insurance industry would encourage forum shopping and increased litigation costs as insurers found themselves defending baseless or unmeritorious claims, according to the Financial Services Council (FSC).

The FSC has mounted a vigorous defence to suggestions that the UCT legislation covering general insurance should be extended to the life/risk sector.

“We do not believe that a case has been made in relation to the incidence of unfair terms in contracts of life insurance,” the FSC has told a Parliamentary committee.

Related News:

It said that “to extend the UCT legislation to these contracts will encourage forum shopping and increased litigation costs in defending baseless or unmeritorious claims”.

“These costs may need to be passed on to consumers without any material benefit,” the FSC said.

Referring to recent adverse publicity around life insurance claims-handling, the FSC maintained this still did not justify extending the Unfair Contract Terms.

“While we accept that some recently publicised claims highlight the need for life insurers to have processes to update medical definitions in their policies, these cases do not indicate that the relevant policies contained unfair terms at the time they were entered into,” it said.

“Extending the UCT regime to life insurance policies would not address the issue of out-dated medical definitions in life insurance policies. This issue is being addressed by the FSC Life Insurance Code of Practice, which obliges life insurers to have processes to review their medical definitions on a regular basis.”




Recommended for you

Author

Comments

Comments

The FSC should change its name to "Maximise Bank Profits At The Expense Of Consumers Council". Or MBPECC. First they lobby to remove advisers from the Life Insurance process, make it hard for small independent advisers to stay in business through increased costs, training and compliance. forcing us to join bank subsidiary owned dealers groups. Then without the consumer protections customers have traditionally had when getting insurances through a no aligned adviser (compare policies and definitions, act in best interests, tailor solutions to suit client needs, ASSIST AT CLAIM TIME, to start with), they want to allow their direct wings to be able to sell their EXPENSIVE JUNK policies with even less responsibility to the client which will ensure that their direct policies are even worse.

They will start to bring back disability policies where you need to be injured on public transport to claim (these existed). But knowing the FSC members they will most likely put things in their contracts like "you need to be injured or die in a meteor shower whilst cutting your toe nails on the 29th of February".

Do anyone other than the politicians and public servants on their pay roll take the MBPECC seriously?

Unfair contract terms create a new cause of action - it is not apparent to me why having unfair contract terms apply to life insurance would encourage forum shopping - or even how/why a person who has a claim about their TPD insurance would engage in forum shopping. Moreover, it is also not apparent why these provisions would promote baseless or un-meritorious claims - it seems very odd to me that provisions that have been in place for years with respect to the most mundane of financial services contracts and which have operated without incident should not apply to a product as important as TPD Insurance.

The FSC is a hideous corrupt organisation. Sally Loane will not publicly answer the question on why the FSC members chose to hide the real facts and data from ASIC showing that churn was not an industry issue until after the LIF was passed.
Now they want to be anti something that may make them step up on their junk direct non paying at claim policies.
Horrible corrupt profit grabbing by any means organisation that is the FSC.

Add new comment