Royal Commission reforms go into Parliament

A number of reforms arising from the Royal Commission into Misconduct in Financial Services have been tabled in the Federal Parliament.

The National Insurance Brokers Association (NIBA) CEO has indicated that they are currently examining the legislation in detail, to see how the Bill compares to draft legislation circulated earlier in the year, “Any issues or concerns will be communicated to treasury in the near future.”

Below is a schedule indicating when the reforms are intended to take effect. For reforms starting on 1 January 2021, this will of course require the passage of the legislation through the Parliament prior to Christmas 2020.

Booth said, “NIBA is pleased that the anti-hawking reforms and the proposed ‘deferred sales model’ reforms will not take effect until October 2021. This will give insurers and insurance brokers time to understand the impact of the reforms, and develop procedures to give effect to the new requirements.”

“NIBA will provide more detailed information on each of the reforms once our examination of the Bill is complete, and it is clear when the legislation will be passed by the Parliament.”

Enforceable Code Provisions (recommendation 1.15)

Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Caps on commissions (recommendation 4.4

Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Use of terms “insurance” and “insurer” (additional commitment in relation to recommendation 4.2)

Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Insurer avoidance of life insurance contracts and duty to take reasonable care not to make a misrepresentation (recommendations 4.6 and 4.5)

Date of effect:

Part 1 applies to any life insurance contract that is entered into from the later of Royal Assent and 1 January 2021.
Part 2 (relating to recommendation 4.5) applies to consumer insurance contracts that are entered into on or after 5 October 2021.

Adjustment of APRA and ASIC’s roles in superannuation (recommendations 3.8, 6.3, 6.4 and 6.5)

Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Statutory obligation to cooperate and formalising ASIC meeting procedures (recommendation 6.9 and 6.11) 

Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Reference checking and information sharing protocol, and Breach reporting and remediation (recommendations 1.6, 2.7, 2.8, 2.9 and 7.2) 

Date of effect: generally apply from 1 October 2021.

Deferred sales model for add-on insurance and Corporations (Fees) Amendment (Hayne Royal Commission Response) Bill 2020 (recommendation 4.3 

Date of effect: Later of the day after Royal Assent and 5 October 2021

Hawking of financial products (recommendations 3.4 and 4.1) 

Date of effect: Later of the day after Royal Assent and 5 October 2021.

Claims handling and settling services (recommendation 4.8) 

Date of effect: commences on the later of the day after Royal Assent and 1 January 2021.

Trustees of registrable superannuation entities should have no other duty (recommendation 3.1)

Date of effect: commences on the later of the day after Royal Assent and 1 July 2021.