The AFA and Labor say the passing of the Life Insurance Framework bill through Parliament is only the start of further reform in the banking and financial services sector.
ALP Senator Jacinta Collins spoke on the Senate floor yesterday in support of the “modest reforms” within the Corporations Amendment (Life Insurance Remuneration) Bill 2016, which passed unopposed shortly after.
But she also mentioned that the bill does not guarantee the new standards in the bill will be enforced.
“As mentioned earlier, ASIC’s review of retail life insurance found a striking lack of compliance in this space,” Ms Collins said.
“We support ASIC in the steps that it takes to ensure that advisers abide by these laws.”
Ms Collins said the bill does not address the issue of conflicted remuneration for claims handlers.
“Claims handlers are charged with making a fair decision on the merits of life insurance claims,” she said.
“It is very concerning that ASIC’s recent report, Life insurance claims and industry review, showed that at least two life insurers are still paying remuneration that includes incentives in relation to claims handling.”
Ms Collins drew attention to Labor’s continued push for a banking royal commission as the only way of addressing the broader issues within the banking and financial services sector.
“Labor believes that any systemic issues need to be ventilated and investigated in a thorough and transparent way,” she said.
“We need to give victims a chance to be heard and we need to give Australians the confidence that these repeated scandals won’t continue to occur.”
Meanwhile, AFA chief executive Brad Fox said the broader Life Insurance Framework extends beyond the bill, and includes approved products lists, simplifying statements of advice and a life insurer code of practice.
“Progress has been made in these areas, but more work is required from the insurers, superannuation trustees, ASIC and some licensees to carry their share of life insurance reform and we will continue to push them to complete these reforms by the new remuneration start date,” Mr Fox said.
“We will be working to focus attention on completion of the remaining reforms by other players, while supporting our members as they prepare for the start date of 1 January 2018.”