FSC seeks exclusion of professionals from new claims handling

In response to proposed legislation put forward by the government, the FSC requested that the proposed legislation does not capture people such as doctors, physiotherapists and accountants acting in their professional capacity by providing an expert opinion in claims matters.

The legislation seeks to address Recommendation 4.8 of the Hayne royal commission final report, stating that “the handling and settlement of insurance claims, or potential insurance claims, should no longer be excluded from the definition of ‘financial service’”.

FSC chief executive Sally Loane said while they may have a role in the process, these experts, specialists and services providers are external to the insurer and hold no delegated authority to make a claims decision.

“For instance, a doctor providing an opinion on an injury which could be the subject of an insurance claim. The conduct and compliance of these professionals is already governed by their own professional body and the associated licensing arrangements,” she said.

Ms Loane said she welcomed the opportunity to submit a response to the proposed legislation and used the opportunity to seek clarification and certainty regarding the timing from which obligations would be expected to commence.

She said entities should be treated consistently and given certainty on the date that their obligations commence, noting that currently there is ambiguity in the legislation, before suggesting clarification that all obligations under the new regime will apply from 1 July 2021.

“A definitive date is vital to ensure claims handling services (CHS) can continue to be processed smoothly, because we know that illnesses, car crashes and accidents don’t just stop because of new obligations, rules, processes and licensing backlogs. Clarity on the date is essential,” Ms Loane said.

“The successful implementation of Recommendation 4.8 will require industry to act immediately and invest significant resources in order to ensure that legislative requirements are satisfied on both an initial and ongoing basis.

“We understand that ASIC will be releasing an information guide to clarify the regulatory expectations under the regime. A timely release of this IG would greatly assist industry to more effectively implement the appropriate changes.”

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].