The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 has been passed by the Federal Parliament, addressing 20 recommendations and one additional commitment from the Hayne Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
In his statement, Treasurer Josh Frydenberg said, “These changes are complemented by providing further clarity regarding the role of the regulators and enhancing the requirements of financial institutions reporting breaches of the law which will ensure significant misconduct is reported and investigated sooner.”
National Insurance Brokers Association (NIBA) CEO, Dallas Booth welcomed the passage of the Bill through parliament, and said, “We will now develop information packages for our members on the range of reforms contained in the Bill. This will be a major area of focus for NIBA during 2021.”
This legislation is a major step forward in completing the implementation of the Hayne Royal Commission and strengthen protections for consumers by:
- strengthening the unsolicited selling (anti-hawking) provisions, including for superannuation and insurance products, to prevent pressure selling to consumers;
- introducing a deferred sales model for add-on insurance products, to promote informed purchasing decisions and prevent inappropriate sales of add-on insurance;
- making the handling and settlement of insurance claims a ‘financial service’, which will require insurers to behave honestly, efficiently and fairly and comply with other licensing obligations, to improve claims handling practices;
- prohibiting the trustee of a superannuation fund from having a duty to act in the interests of another person, other than those arising from their duties as trustee of a superannuation fund; and
- allowing provisions in financial services industry codes to be enforceable, with breaches attracting civil penalties, ensuring better adherence by industry and certainty for consumers.
Insurance Council of Australia (ICA) CEO, Andrew Hall said, “The Insurance Council and its members now look forward to working with Commonwealth Treasury, ASIC, and other groups such as consumer advocates to bring these reforms to life.”
“There are practical implementation issues that we are keen to see resolved so the legislation can maximise consumer outcomes as effectively and quickly as possible.”