The Business Council of Co-operatives and Mutuals (BCCM) has released a code of conduct to govern the use of discretionary mutual funds (DMFs), strengthening affordable risk protection across the Australian economy.
Unlike traditional insurance contracts, DMF's products' cover is provided on a discretionary basis, with fund members having a right to have their claim considered but no automatic, contractual right to indemnity.
As a response to the request of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), the BCCM launched a guide on principles, code of conduct, and good practices for DMFs.
“As insurance markets harden, an increasing number of sectors across the economy are being impacted by a lack of access to appropriate risk protection,” said BCCM CEO Melina Morrison. “DMFs offer an alternative, providing financial protection in the event of a broad range of property loss or damage and third-party liabilities.”
Commenting on the code of conduct's launch, Unimutual CEO Geoff Henderson said: “The document is a valuable educative resource for all stakeholders with an interest in this model including policymakers, regulators, industry associations, businesses, advisors, and mutual managers, as well as the wider community.”
Andrew Armitstead, CEO of local government provider CivicRisk Mutual, added that co-operatives and mutuals are focused on the long term: “They are not a short-term solution and are more likely to endure through difficult financial times. These guiding principles and code of practice will further underpin that essential ethos.”
Signatories to the new governing document for DMFs make a voluntary commitment to:
They also seek to observe 42 good practices covering structure, board, management, audit and risk, finance, and compliance that underpin the operation of sustainable, member-focused DMFs.
