Regulatory changes continue at pace, with the government discussing changes that ASIC faces over the short-term to help protect consumers.
Kelly O’Dwyer, minister for revenue and financial services, told attendees of ASICs 2018 Annual Forum this week that the government will continue to look to include general insurance products under unfair contract terms legislation.
“While this will be a significant reform for industry, it is in the best interests of consumers and will bring the insurance industry into line with other financial services,” O’Dwyer said.
O’Dwyer said the move comes in response to the Senate committee report on the general insurance industry and the Australian Consumer Law Review.
The minister also noted that the government continues to monitor the treatment of mental health issues by insurers.
O’Dwyer cited the Actuaries Institute Green Paper on mental health and insurance from October 2017, calling the paper “a welcome development,” but noted that more can still be done.
“Given the incidence of mental health issues across the population, it is in the best interests of the community that the insurance industry, regulators and government work together to deal fairly and effectively with this issue,” she said. “I look forward to seeing further progress in this area.”
O’Dwyer also discussed the draft legislation the government invited comment on late last year on new design and distribution obligations for issuers and distributors of financial products and new product intervention powers for ASIC.
Design and distribution legislation is designed to ensure financial products are targeted and sold to the right consumers, O’Dwyer said, as more work is needed to complete the reforms.
“Now let me make clear from the outset, there is more work to do on these critical reforms. The feedback received from the last round of consultation raised a number of issues and the government is carefully considering these,” she said. “When, and only when, these issues have been given full and deep consideration and after additional consultation will the legislative package be finalised and ready for introduction.”
O’Dwyer said that under the new regime, firms will be required to identify the target market for their products and design products specifically for that market.
“Further, both issuers and distributors will be required to take reasonable steps to ensure that products are distributed appropriately – that is, distributed to the target market only,” O’Dwyer said. “These are significant reforms that will change the landscape for the sale and distribution of financial products in this country.”
ASIC’s new product intervention powers will complement these design and distribution changes, O’Dwyer said, as the regulator will be able to intervene in the sale of a product, a product feature or practices related to the distribution of a product where ASIC “perceives a risk of significant consumer detriment.”
“The design and distribution obligations and the product intervention power are complementary and interconnected, and I am confident that together they will represent vastly improved consumer outcomes,” O’Dwyer said.