With fewer than 15 applications lodged to date, ASIC has called on insurance claims handling firms to lodge licence applications (new and varied) as soon as possible, and by no later than 7 May 2021.
A statement from the commission explains that since 1 January 2021, claims handling and settling is a financial service which requires a licence by 1 January 2022 (see: AFS Licence for Claims Handling).
Deputy Chair, Karen Chester says: “Time is running out for firms to lodge their applications with ASIC. To date we’ve received fewer than 15 applications for the new claims handling and settling service. Some applications received have also needed to be re-submitted because of their poor quality.”
She says the commission is concerned that firms are running the risk of not submitting a complete application in time to get the benefit of the legislated transition period.
“Firms need to submit an application no later than 7 May 2021. Failing to do so poses a real risk that these firms will have to stop providing claims handling and settling services after 30 June 2021.”
The statement adds that applications submitted after 7 May 2021 risk being rejected at the deadline of 30 June 2021 which is the legislative deadline to access transitional arrangements.
…ASIC will reject an application if it is incomplete…
It says ASIC will reject an application if it is incomplete. “Rejections occurring close to the 30 June 2021 deadline may mean that the applicant has insufficient time to rectify and re-submit their application.”
A complete application accepted by 30 June 2021 can proceed to assessment and a decision can then be made whether to grant or vary an AFS licence.
“These applicants can continue to provide claims handling and settling services while ASIC assesses the application during the six month transition period.”
To assist firms ASIC issued a draft version of an information sheet on 27 November 2020 to help firms prepare and submit their applications as soon as possible after 1 January 2021.
Final Claims Handling and Settling Service Information Sheet
It has now issued the final claims handling and settling service information sheet – INFO 253 which, it says, assists firms to understand how the claims handling and settling services reforms may apply to them.
ASIC has made minor changes to the draft information sheet published in November 2020 following feedback received from stakeholders.
Updates have also been made to incorporate relevant regulations made by Government. “ASIC anticipates that the Government will make further regulations in relation to persons who are claimant intermediaries, and ASIC will update INFO 253 once they are made.”
…. draft regulation that would provide an exemption for financial advisers operating as intermediaries in the claims handling process…
The AFA’s General Manager of Policy and Professionalism, Phil Anderson, told Riskinfo that Treasury consulted earlier this year on a draft regulation that would provide an exemption for financial advisers who are operating as intermediaries in the claims handling process.
He says the AFA has provided feedback to Treasury on areas where the proposal can be improved, including allowing the exemption to apply to new clients and to other staff within the practice.
“We are expecting this regulation to be finalised over the next couple of weeks. Hopefully this regulation will provide a full exemption for financial advisers.”
He adds that licensees should keep an eye out for this and then quickly assess whether it provides the necessary protection before considering whether it is necessary to apply for a licence variation.
He notes too that in ASIC’s statement it acknowledges “…that a regulation is expected with respect to intermediaries and that they will update their guidance once this has been released. ASIC is dealing with many different groups who are impacted by this legislation.”
Anderson says the AFA appreciates that this matter is causing some concerns for the financial advice sector and “..hope that we will have greater clarity in the very short term”.
Click here to download INFO 253.
