ASIC flags new claims handling restrictions for advisers

The regulator on Friday released a draft information sheet around insurance claims handling in response to the introduction of the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 into parliament earlier this month.

The regulator advised that as a result of the new laws, industry participants involved in insurance claims handling - including advisers as well as insurers, claims managers and brokers - would need to get an AFS licence, obtain a variation on their existing licence or obtain authorisation from another AFS licensee.

Advisers seeking a license authorisation for claims handling would need to complete a claims handling and settling service statement as part of their application, ASIC said.

ASIC advised a transition period would be in place whereby applications would need to be lodged by 30 June 2021 for the adviser to continue providing claims handling services to a client.

After 1 January 2022, advisers would no longer be able to provide the services if they did not have an approved application.

"Applicants can start preparing materials for their application now to allow for timely lodgement as soon as ASIC is able to start taking applications," the regulator said.

"In the lead up to the commencement of the reforms, ASIC will continue to engage with industry about their implementation of the new requirements and whether ASIC can provide additional assistance to help industry transition to the new requirements."