INSURANCE REGULATORY REFORMS DELAYED

The Federal Treasurer Josh Frydenberg has announced a six month deferral to the implementation of commitments and reforms associated with the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry as a result of the significant impacts of the COVID-19 pandemic.

National Insurance Brokers Association (NIBA) CEO Dallas Booth said, “This deferral applies to those measures that the Government has indicated would be introduced into the parliament by 30 June 2020 and December 2020 along with commencement dates contained in draft legislation issued prior to the pandemic.”

“This announcement followed representations by NIBA and an number of other finance sector industry associations who all pointed out the efforts directed to supporting clients in these extremely difficult times, while working in a non-traditional manner – mostly from home. These are not the circumstances where it is possible to implement new processes and procedures in an efficient and effective manner.”

The Australian Securities Investment Commission (ASIC) has also announced that it is deferring the commencement date of the design and distribution obligations legislation to 5 October 2021 (it was originally to set to commence on 5 April 2021).

Draft guidance for the design and distribution obligations was released for consultation on 19 December 2019, with consultation closing on 11 March 2020. NIBA made a strong and extensive submission to ASIC in response to the draft guidance, and will continue to meet with ASIC to discuss concerns on behalf of brokers.

“We note that while commencement is delayed, ASIC remains keen to finalise guidance as soon as possible,” Booth continued.

“The postponement is to allow industry participants can focus on immediate priorities and the needs of their customers at this difficult time. ASIC expect entities will continue preparing for commencement on the extended timeline.”

NIBA’s Legal Adviser, Mark Radford said, “Unfair contracts terms reforms have not been deferred to at this point. We understand from Treasury that the commencement date for the UCT regime will commence as currently legislated on 5 April 2021.”

The Treasurer will have a temporary instrument-making power in the Corporations Act 2001 to temporarily amend provisions of the Act to provide relief from specific obligations or to modify obligations to enable compliance with legal requirements during the crisis.

The instrument making power will apply for six months. Any instrument made under this power will apply for up to six months from the date it is made.

NIBA has confirmed that it will provide further details in due course about the implementation of the Royal Commission reforms, as each area of reform is finalised for implementation into parliament.

You can access an explanatory note by Radford on the NIBA website.