The Government has released a regulation that will provide an exemption for financial advisers from the need to vary their AFSL in order to provide claims handling.
In a note to its members at the end of last week, the AFA say this regulation provides an exemption for individually licensed advisers and authorised representatives.
The AFA explains that in December last year the Government passed the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, which included a number of elements that will impact financial advice, including a requirement for AFSLs to include an authorisation to assist with insurance claims
The association says that at that time there was some concern expressed about whether financial advisers needed to vary their licence to include an authorisation for claims handling.
“We were aware at that time of the possibility of a regulation excluding financial advisers, and therefore encouraged members to wait and see what emerged.”
…the regulation appears to meet the needs of the small business financial adviser population…
THE AFA statement says that the regulation “…appears to meet the needs of the small business financial adviser population”.
It added that whilst the regulation does not specifically refer to staff members of financial advice practices playing a role in claims handling, it was pleased to see that this was specifically referred to in the explanatory statement which accompanied the release of the regulation.
The explanatory statement explains that the Financial Sector Reform (Hayne Royal Commission Response) (Claimant Intermediaries) Regulations 2021, dated 15 April 2021, would finalise the implementation of recommendation 4.8 of the Financial Services Royal Commission.
In that recommendation, Commissioner Hayne recommended that insurance claims handling should be regulated as a ‘financial service’ under the Act.
The explanatory statement includes financial advisers amongst those exempted noting that “…these people are excluded from regulation under the Corporations Act 2001 from having to obtain [an AFSL] for insurance claims handling as a claimant intermediary, because handling claims is typically not their core business and often they… do so for no monetary benefit.
“The Act is instead intended to require people to obtain an Australian financial services licence when they derive a monetary benefit from acting for the consumer to handle insurance claims.”
