Day two of the 2019 NIBA Convention opened with the regulators.
Danielle Press, Commissioner of the Australian Securities and Investments Commission (ASIC), David Locke, CEO and Chief Ombudsmen of the Australian Financial Complaints Authority (AFCA), and Michael Gill, Chair of the independent Insurance Brokers Code Compliance Committee discussed the current regulatory landscape and what it means for insurance brokers.
In opening the regulatory session, Press said: “One of the things we’re thinking about as a regulator, is how do we protect consumers better across the financial services industry.
“We’ve just release a joint report, Disclosure: Why it shouldn’t be the default, with the Dutch Authority for Financial Markets, which covers about 10 years of case studies around disclosure and warnings, and surprise surprise, we’ve worked out that disclosure doesn’t necessarily protect consumers.
“And even worse, at times disclosure back fires, and you as practitioners, probably know that,” she added.
However, Press acknowledged that disclosure is important, as it documents the deal and sits behind the obligation, but it doesn’t help consumers choose, and it doesn’t ever compensate for complications.
“We do think that there is going to be a focus going forward on things like the design and distribution obligation, and some of our work we’re doing in product intervention.”
Throughout the course of her address, the Commissioner outlined seven strategic priorities of ASIC, these include:
- high deterrent enforcement action;
- prioritising the recommendations and referrals from the Royal Commission;
- delivering as a conduct regulator for superannuation;
- addressing harms in insurance;
- improving governance accountability;
- protecting vulnerable consumers; and
- addressing poor financial outcomes.
Narrowing in on insurance, Press said: “We are supporting Treasury in the implementation of the law reform coming out of the Royal Commission, so that includes things like extending unfair contract terms provisions to insurance and small business, to ensure that the power imbalance that is experienced by consumers and small businesses is starting to level out, and this take it or leave it standard form of insurance contract is not damaging.
“Claims handling is becoming a financial service, and we are looking very closely at claims handling to ensure that consumers are treated fairly,” she added.
Press said that while ASIC will be providing input into the review of conflicted remuneration in general insurance, the review will be carried out by Treasury.
As she drew to the end of her presentation, Press encouraged industry to move quickly, and to move forward on these issues where there are problems.
Locke took the opportunity to reflect on AFCA’s first 11 and a half months in operation.
The Chief Ombudsman said: “In terms of insurance brokers, you don’t keep me awake at night.”
Locke said AFCA had received 66,739 complaints, 325 of which were with regards to brokers.
“When I was talking to Dallas and the NIBA Board a few months ago about what we’re actually seeing, we’re not seeing big problems in this sector at all.
“What we do see is 56 per cent of those matters resolved by agreement, or there’s been a settlement offer made that the complainant has accepted – I think very few of those matters have gone through to determination at this point in time,” he said.
In his presentation, Locke highlighted the following four key changes:
- From 1 October publication of all decisions naming financial firms
- Publication of Comparative Tables and data set
- Focus on data analytics and intelligence
- Work with Treasury on Compensation Scheme of Last Resort
The Chief Ombudsman also announced an AFCA Financial Fairness Roadshow, which will take place in 80+ locations across Australia – more information can be found here.
Finally, IBCCC Chair, Michael Gill, told brokers they must do better for consumers when it comes to handling complaints.
Gill referred to a recent report, which found that insurance brokers who subscribe to the Insurance Brokers Code of Practice (the Code) need to reduce the length of time they take to respond to and resolve complaints if they are to build and maintain consumer trust.
According to the report, more than one-quarter of subscribing insurance brokers do not monitor timeframes during their internal dispute resolution process.
Gill said: “There is room for significant improvement in the way that the Code subscribing insurance brokers manage timeframes for handling complaints.”
“This is important for both consumer protection and to ensure subscribers are not breaching the Code of Practice,” he added.
A copy of the report can be obtained here.
In concluding, the IBCCC Chair urged brokers to treat the Code seriously.