Insurance industry welcomes ASIC reforms

Insurance industry welcomes ASIC reforms | Insurance Business

Insurance industry welcomes ASIC reforms
The Insurance Council of Australia (ICA) has welcomed moves by the federal government to strengthen the powers of the Australian Securities and Investments Commission (ASIC) but The Financial Rights Legal Centre has said the moves are no silver bullet for issues facing financial services.

The Turnbull government’s $127.2 million reform package will equip ASIC with greater powers and funding and bolster consumer confidence in the sector while ASIC chairman Greg Medcraft will see his term extended by 18 months.

Treasurer Scott Morrison and assistant treasurer Kelly O’Dwyer said in a joint statement that the increased funding will see the regulator enhance its surveillance capabilities.

“The broad reform measures will equip ASIC with stronger powers and funding to enhance surveillance capabilities better enabling our corporate watchdog to combat misconduct in Australia’s financial services industry and bolster consumer confidence in the sector,” the statement said.

ICA chief executive officer Rob Whelan says properly resourced regulators play a critical role in upholding public confidence in the country’s financial sector which is an essential contributor to the economy’s growth and employment.

“The Insurance Council of Australia (ICA) welcomes moves by the Federal Government to bolster the resources and powers of the Australian Securities and Investments Commission (ASIC),” Whelan said.

“The ICA recognises that properly-resourced regulators play a vital role in maintaining confidence in the country’s financial sector, which is a key contributor to economic growth and employment.

“The ICA anticipates the new funding model and powers will better equip ASIC to meet the expectations of financial services consumers.”

However, he says it’s essential that the proposed new funding model creates incentives for regulators to maximise efficiency in order to keep costs down for financial services providers and their customers.

“The general insurance sector poses lower systemic risks relative to other sectors and this should be reflected in the volume of any levy for general insurers. The ICA looks forward to the opportunity to consult with the government as it seeks to design and refine the funding model.”

The Financial Rights Legal Centre has also endorsed the announcement of major additional funding and powers for the regulator.

Principal solicitor Katherine Lane said it’s essential to fund a strong and healthy regulator and the extra money and extra powers are positive news for the industry but the move is no silver bullet to fix the multitude of problems faced by financial service customers.

“Funding a strong and healthy regulator is essential and the extra money delivered today is good news, as is the additional powers,” Lane said.

“I would note however that while funding a strong regulator is critical, it will not fix the multitude of problems faced by financial service consumers.

“It won’t make unfair terms laws apply to insurance; it won’t ensure insurance policies are suitable for the needs of customers; it won’t improve claims handling in insurance; it won’t address poor service and conflicted behaviour in mortgage broking; it won’t regulate the proliferation of debt management firms who are currently preying on customers in financial difficulty, taking their cut and making problems worse; and it won’t address cultures which are technically legal but ethically repugnant.”