Following a year of consultation and development, Parliament passed the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 on 10 December 2020. The Act is now awaiting the Royal Assent.
While some changes were made to the bill before it was passed, these related to APRA and ASIC’s role in superannuation and do not affect the insurance regulatory changes.
The Act introduces the following regulatory reforms directly affecting the insurance industry:
- Enforceable code provisions;
- Avoidance of life insurance contracts;
- Duty to take reasonable care not to make a misrepresentation;
- Deferred sales model;
- Caps on vehicle dealer commissions;
- Hawking of financial products;
- Use of the terms ‘insurance’ and ‘insurer’;
- Regulation of claims handling and settling services; and
- Revamp of the breach reporting regime for AFSL holders.
For our analysis on each of these reforms, please see our recent article.
In related news, ASIC also released today its long awaited Regulatory Guide 274 on Product Design and Distribution Obligations. The obligations commence on 5 October 2021. We will be providing our insights on the new Regulatory Guide on this blog. You can subscribe for updates on the right hand side.
You can also track the implementation of these and other insurance regulatory reforms on our Insurance Regulatory Hub.