More industry change required: Labor

The Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 and the Corporations Amendment (Life Insurance Remuneration) Bill 2016 passed the Senate yesterday unanimously and without amendments.

Before the votes, however, Labor Senator Jacinta Collins said these reforms only represent a step in the right direction, and that there is more to be done.

“While Labor supported this bill as a welcome step forward, there is a lot more to be done to resolve the issues surrounding the culture practices and consumer protections in banking and the financial services sector,” she said.

In regard to the professional standards bill, Ms Collins said the public will need to watch closely who the government appoints to the standards-settings body, to be established by 1 July 2017.

“If the government is serious about these reforms, then they need to be people of high calibre and significant experience,” she said.

“The board needs to include people with strong track records of standing up for consumers. The makeup of the board needs to be such that it can ensure these standards are set to a robust level.

“If the standards setting body is weak, then the regime will be weak.”

Senator Collins also said that the LIF bill does not go far enough, as it does not address concerns about life insurers’ claims handling processes.

“The bill does something in relation to conflicted remuneration for financial advisers selling life insurance products but it doesn't address the issue of conflicted remuneration for claims handlers,” she said.

“The final bill does not address the broader cultural and systemic issues that have come to light within the banking and financial services sector.

“So we support these modest reforms in this bill. I hope that they will improve consumer confidence and the quality of financial advice on life insurance. However, they only go so far.”