Major industry funds body the Australian Institute of Superannuation Trustees (AIST) has strongly opposed carving-out insurance claims handling from the licensing and financial advice rules.
In a submission responding to Government’s move to make insurance claims handling a financial service and therefore remove its exemption under the Corporations Act, the AIST said it strongly supported the removal of the exemption and “accordingly, we also do not support the introduction of more specific carveouts going forward”.
It also made particular reference to the likelihood that precluding such carve-outs would limit the ability of lawyers to chase compensation work.
“The protection of members should take primary precedence,” it said.
“The example of completing member total and invalidity claims forms demonstrates why specific carveouts should not be supported,” the AIST response said. “While seemingly of value to members who are experiencing a difficult time, the current exemption has led to some law firms heavily advertising to undertake such work.”
“Anecdotally, it seems that such law firms may be charging members up to large amounts (e.g.70 per cent) of any benefit which is paid from a superannuation fund. Such undertakings should be licensed, and members provided with adequate protection,” the AIST response said.
“Ultimately, any benefits and products offered by superannuation funds may be explained to members in a factual way (here are the benefits and products offered),” it said. “If a member requires personal advice, such advice should be under the licensing and financial advice rules. This should apply to instances where members are liaising with insurers or the superannuation fund about their total and permanent invalidity claim.”
“Insurance claims handling is a financial service. Accordingly, AIST supports the coverage of provisions to superannuation trustees, and others with a decision-making role over claims, including agents.”