A major superannuation funds body has proposed to exclude advice obligations from insurance claims.
This was made in response to a major government consultation on the proposed reforms to make insurance claims handling a financial service.
Read more: Government moves to reform claims handling
In a submission filed with the Federal Treasury, the Association of Superannuation Funds of Australia (ASFA) said insurance claims handling should not be subject to the same obligations as financial advice and called against requiring superannuation funds to obtain an Australian Financial Services License (AFSL), noting that not all registrable superannuation entity (RSE) licensees hold an AFSL, Money Management reported.
“ASFA considers that while such licensees should be held to account in the same way as other trustees, it would be beneficial if RSE licensees were not required to obtain an AFSL for the sole purpose of satisfying this claims-handling obligation,” ASFA said.
ASFA said it would be happy to set up a consultation group to assist ASIC if the regulator “wishes to explore these issues further and to ensure that this reform is adapted to the superannuation environment to achieve its purpose as efficiently as possible.”
“Finally, ASFA acknowledges that the consultation paper has already identified this as a risk, but we wish to emphasise the importance of claims-handling obligations being kept separate from those related to financial, especially personal, advice,” the submission said. “If claims handling were to be regarded as subject to the financial advice obligations, fund members would suffer increased costs and delays due to disclosure requirements and limits on the range of information that could be provided with no obvious additional benefit to the fund member.”
ASFA said that while it supported the royal commission recommendation to make insurance claims handling a financial service, it believed insurance inside superannuation should be treated in a different manner to insurance outside superannuation, Money Management reported.
“A different approach may be required for the treatment of RSE licensees to ensure that the same objectives are achieved both within and outside the superannuation system,” ASFA said.