FSC Pushes Out Life Insurance Code Release to October

The Financial Services Council (FSC) has announced that it will release its new Life Insurance Code of Practice in October, pushing back the original release date by three months, after ongoing consultation with consumer groups.

The Code was due for release on 1 July 2016 with the FSC stating the delay stemmed from the need for the further development of a number of areas covered by the Code, including sales practices and claims handling, following consultation with stakeholder consumer groups.

In a statement released to media, the FSC said the additional three months would be used to develop a Code that was ‘robust, easy to understand and will genuinely assist consumers’.

“We have been working with consumer groups over recent months and believe our discussions will benefit from a further investment in ensuring the Code is as strong as it should be.”

While the first public release of the Code has been pushed back the FSC said the Code would still become compulsory for all FSC Life Insurance members from 1 July 2017 and the 12-month transition timetable for members would be shortened “to ensure that consumers are not impacted by the additional time taken by the FSC to finalise the Code.”

“We have been working with consumer groups over recent months and believe our discussions will benefit from a further investment in ensuring the Code is as strong as it should be,” the FSC stated.

“The broad range of parties being consulted by the FSC, including consumer groups, are seeking a Code of Practice that is easy for consumers to understand and reinforces trust in the life insurance sector.”

The FSC stated the Code was a key recommendation of the Trowbridge Inquiry into life insurance in 2015 which called for a guaranteed level of service for consumers when purchasing life insurance and plain English information in insurance.

  • Ben

    The corporations/organisations/AFA on the side of these reforms have stated in their submissions that there are benefits to consumers and that they will get greater access to unbiased advice on insurances. Please just answer 3 simple questions Kelly Odwyer, Brad Fox and FSC bank stooges.
    1. how does reducing the amount of independent risk specialists (a stated outcome of the reforms) and driving people to direct insurance providers (who only sell their product and do not have to act in the BEST INTERESTS OF CLIENTS) and “google” self research promote access to unbiased advice?
    2. what do these reforms actually do to stop churning that couldn’t have been done by the insurers themselves. If an adviser (or direct sales person) meets a new client who has existing insurance and cancels and replaces the policy how do these laws prevent this?
    3. MOST IMPORTANT. Name a single benefit to consumers. I only ask for 1. Just 1 benefit

    • WB

      Very good questions Ben! The problem is that advisers have repeatedly asked the FSC as well as the AFA and FPA for answers to such questions for many months now, but they will not answer – mainly because they can’t. It’s almost as if they think that somewhere down the track advisers will simply accept the changes and we will all move on. Unlike FOFA and other such enquiries however, the LIF in its current format has the potential to destroy the retail life insurance industry and this is something these organisations just don’t get. By the time the message gets through, it will be too late.
      Prove me wrong FSC – answer Ben’s questions!

      • Ken

        Someone or something has “stirred” the FSC or why would they not just go with the first proposal
        They either don’t know or don’t care ( more likely the second option )about the effect that these changes will have on our industry and the Australian people as a whole
        This is pure greed in my humble opinion pushed by the banks and their aligned insurers Will the AFA and FOA be invited to speak with theses new consumer groups ? Will they explain our position and the threat to not only existing advisers but those who were contemplating entering our profession but are having second thoughts when they look at the already heavy burdon of compliance to be now married to a remuneration and responsibility period that does not take into account the overall work needed to get the covers correct and in place
        How about the LICG will they get an opportunity to put Choice and their outrageous statements in place
        Keep fighting all this is a real chance to get involved and make a difference

  • Jeremy Wright

    Does the consultation with consumer groups include Choice? who are pushing for nil commission and has the FSC bothered to consult with the people who bring in the premiums, which are the consumers (not consumer groups who know little about anything) and advisers who talk to all Australians and are the only group who understands what consumers want and need.

    Even assuming the FSC did consult advisers and consumers, they would not have the experiance or integrity to ask the right questions in order to come up with a workable position.

    Based on their track record, they will make recommendations that have little impact on the big end of town and put all the responsibility back onto the Independent small Business advisers.

    The FSC should be removed from any aspects of the Life Insurance Framework as they cannot be trusted.

  • mark dunsford

    Everybody in our industry, the Political arena, and the Legislator, already know that the FSC, who make out that they are the Industry watch dog and the protector of all things fantastic, are nothing more than a cartel of Bank and Life Insurance companies executives looking to increase their share price.
    We will continue to advise clients of their needs so that if they live too long, die too soon, get sick or hurt along the way, that their family and businesses are protected. When claims need to be settled, we will also be that guiding hand that help deliver the cheques when most needed. As we continue to educate the consumer about the FSC and what their real agenda is, the Life Insurance Industry will be a far better place.
    In 35 years in the industry, I’ve never seen such distrust between Life Insurance Providers, and the advisers in this fantastic industry that provide an amazing surface to everyday Australians.