The government has released draft legislation for the life insurance industry reform package, designed to “ensure the interests of firms and consumers are better aligned” across the life sector.
Assistant Treasurer and Minister for Small Business Kelly O’Dwyer said interested stakeholders are invited to submit comments on the exposure draft legislation and explanatory material to Treasury up until 4 January 2016.
“This package will ensure that the interests of financial firms and consumers are better aligned,” Ms O’Dwyer said.
“On 6 November 2015, I announced that industry had reached agreement on the implementation of these important improvements and the draft legislation is the next step in the process.
“The Corporations Act 2001 (the Corporations Act) will be amended to give ASIC the power to create a legislative instrument to set caps on commissions and implement clawback arrangements. Ultimately, the final form of ASIC’s instrument will be a matter for ASIC, as the independent regulator,” she said.
Reiterating earlier comments on the package, Ms O’Dwyer said the corporate regulator will conduct a review of the retail life insurance industry in 2018 to determine whether further reform is needed.
“If this review does not identify significant improvement, the government will move to mandate level commissions, as recommended in the Murray Inquiry report.
“Industry policy replacement data will be used to inform this review. ASIC will utilise existing provisions in the Corporations Act to facilitate licensee reporting of this data,” Ms O’Dwyer said.
Commenting on the release, AFA chief executive Brad Fox expressed concerns about the length of time industry stakeholders will have to provide any comments on the bill.
"We are concerned about the timeframe in which the government is seeking valuable feedback from the AFA and other key stakeholders and will express this concern," Mr Fox said.
Legislation for the life insurance sector is set to be introduced into Parliament in early 2016, with the reforms set to commence on 1 July 2016.
In a separate announcement, Ms O’Dwyer said the government has released exposure draft legislation for reforms to raise education, training and ethical standards for financial advisers.
Treasury will also be accepting submissions from stakeholders on the draft legislation for improving adviser education and professional standards up until 4 January 2016.