Regulatory

Section 6 – farewell (and good riddance!)

By Belinda Randall / 17 July 2017 19 June 2019 / Industry, Litigation, Professional Indemnity, Regulatory

In December 2016 we posted on the NSW Law Reform Commission’s recommendation to replace section 6 of the Law Reform (Miscellaneous Provisions) Act 1946 (NSW). Six months later, we can now confirm that section 6 is (finally) dead and herald the new era of the Civil Liability (Third Party Claims Against Insurers) Act 2017 (NSW) (Act). The new Act is now live (from 1 June 2017) and is a welcome clarification of the confusion and ambiguity caused by section 6. The Act permits (at the Court’s discretion) a claimant (ie a liquidator) to sue an insurer of a proposed defendant …

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Breach reporting obligation repealed for group purchasing bodies

By Ann-Marie Coleman / 14 July 2017 19 June 2019 / General, Regulatory

Group purchasing bodies (GPBs) are no longer required to report breaches of the conditions of relief provided by ASIC Class Order 08/1 (Class Order). The obligation to comply with the breach reporting condition in the Class Order was due to commence from 30 June 2017 but has been repealed. GPBs are persons who arrange or hold cover under risk management products for others but neither issue risk management products (except for interests in a risk management scheme) nor provide any financial product advice (except as a result of providing certain general information). The Class Order provides conditional relief to a …

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Call for extension of conflicted remuneration ban

By Ann-Marie Coleman / 12 July 2017 19 June 2019 / Industry, Regulatory

The ban on conflicted remuneration should extend to the general insurance industry and to all life policies, regardless of whether the policy was obtained through the superannuation system or not, according to Industry Super Australia (ISA) and the Australian Institute of Superannuation Trustees (AIST). In May this year the Government sought stakeholder submissions on the five measures enacted in 2013 as part of the Future of Finance Advice (FoFA) reforms. One of these reforms was the ban on conflicted remuneration, including up-front and tailing commissions and like payments, for both individual and group risk insurance within superannuation. This reform sought to …

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ASIC industry funding model introduced

By Ann-Marie Coleman / 21 June 2017 19 June 2019 / General, Regulatory

Late last year the Government announced it would introduce an industry funding model for ASIC (our previous update on this can be found here). The ASIC Supervisory Cost Recovery Levy Bill 2017 and related bills have now passed. Effective from 1 July 2017, ASIC’s regulatory costs will be recovered through annual levies from all industry sectors regulated by ASIC. The amount of the levy will be worked out in accordance with regulations. Whilst the relevant regulations have not yet been passed, the draft regulations apply either a flat or a graduated levy to entities in each industry subsector regulated by …

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ASIC sets commission caps and clawback amounts for life insurance

By Ann-Marie Coleman / 7 June 2017 19 June 2019 / Industry, Regulatory

In February this year the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 (the Act) was passed by Parliament, followed by the associated regulations. Our updates on these can be found here and here. The Act removed the exemption from the ban on conflicted remuneration for commissions paid in relation to certain life insurance products. The Act also enabled the Australian Securities and Investments Commission (ASIC) to allow commissions to be paid if requirements around commission caps (benefit ratio requirements) and clawbacks are met. ASIC has now made ASIC Corporations (Life Insurance Commissions) Instrument 2017/510 (ASIC Instrument) which allows commissions …

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New laws place real estate agents under the hammer

By Natasha Stojanovich / 9 May 2017 19 June 2019 / Professional Indemnity, Regulatory

On 1 May, amendments to the Estate Agents Act 1980 (Vic) took effect in Victoria. The new legislation is designed to address the allegedly widespread practice of underquoting in the Victorian real estate industry. The new laws strengthen existing prohibitions on underquoting, and apply only to residential properties. The legislation requires, amongst other things: The estimated selling price to be reasonable, and within a 10% range, i.e. $500,000 to $550,000 The estimated selling price not to be less than the seller’s asking price, or a price in a written offer which the seller has rejected Agents to change the estimated …

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Life insurance remuneration regulations passed

By Sophie Devitt / 25 April 2017 19 June 2019 / Industry, Regulatory

Following on from our previous update regarding the new life insurance remuneration arrangements, the Corporations Amendment (Life Insurance Remuneration Arrangements) Regulations 2017 (Regulations) have now been passed. The Regulations will take effect from 1 January 2018, the same date as the Corporations Amendment (Life Insurance Remuneration Arrangements) Act 2017 (Act). The Act removed the exemption for life risk insurance products whereby a benefit is not conflicted remuneration if no financial advice in relation to the product has been given to the person in the last 12 months. This was purposely done to allow the Regulations to prescribe circumstances in which benefits …

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ASIC Report into financial advisers

By Chris Lisica / 26 March 2017 19 June 2019 / General, Industry, Regulatory

As part of its Wealth Management Project, Australian Securities and Investments Commission (ASIC) has released its report into how effectively Australia’s largest financial institutions oversee their financial advisers. The report is based on a 20-month project instigated by information received by ASIC about non-compliant advice, as well as public concerns about wider problems in large advice firms. The full report is structured in three key phases and can be accessed here. Phase 1: How the Financial Institutions Identified and Dealt with Non-Compliant Conduct by Advisers ASIC found between 1 January 2009 and 30 June 2015: financial institutions relied heavily on …

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Senate Inquiry into ‘non-confirming’ building products is wrapping up

By Natasha Stojanovich / 23 March 2017 19 June 2019 / General, Industry, Liability/Injury, Litigation, Professional Indemnity, Property, Regulatory

On 23 June 2015, the Senate commenced a wide-ranging an inquiry into the use of ‘non-conforming’ building products (being products and materials that do not meet required standards). The inquiry was launched following a 2014 fire in a Victorian apartment complex involving the use of aluminium composite panelling. The due date for reporting has been extended several times, and the report is now due to be released on 25 May 2017. The long awaited and much anticipated report will address: The economic impact of non-conforming building products on the Australian building and construction industry The impact of non-conforming building products …

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Bill on conflicted remuneration for life insurance passed

By Sophie Devitt / 27 February 2017 19 June 2019 / Industry, Regulatory

The Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 (Bill) has passed both Houses and will take effect from 1 January 2018. After originally lapsing in April 2016, the Bill was reintroduced late last year with minor changes. The Bill will have a significant impact on life insurance brokers and represents the government’s response to a number of investigations into the life insurance industry. Change to exemption against conflicted remuneration ban The Bill amends the Corporations Act to remove the exemption against the ban on conflicted remuneration for benefits paid in relation to certain life insurance products. Conflicted remuneration is …

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Senate Signs off on Financial Adviser Reforms – Changes to Claim Volume/Risk Profile Ahead?

By Belinda Randall / 21 February 2017 19 June 2019 / Industry, Professional Indemnity, Regulatory

Last Week the Senate passed the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 and paved the way for wide ranging reforms (and increased compliance obligations) in the financial advisory industry. The new regime starts on 1 January 2019 and includes the following reforms: – Compulsory education requirements for both new and existing financial advisers. – Supervision requirements for new advisers. – A code of ethics for the industry to apply from 1 January 2020. – An exam that will represent a common benchmark across the industry. – An ongoing professional development component. There is a long transition period …

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ASIC reveals ‘hot spots’ for the insurance industry in 2017

By Benjamin Hine / 20 February 2017 19 June 2019 / General, Industry, Regulatory

Last week Greg Medcraft, the chairperson of the Australian Securities and Investments Commission (ASIC), delivered a speech to the Insurance Council of Australia Annual Forum on the current insurance environment and ASIC’s priorities for the coming year. Current environment The speech commenced by noting that 2016 was an eventful year for the insurance industry. In particular, Medcraft noted the impact of technology and social media and the impact that technology is having on consumer empowerment. Consumer expectations are changing and the impact of social media means that consumers are able to express themselves regardless of media interest. ASIC confirmed that …

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