ASIC has issued relief to reduce the administrative burden on general insurance industry participants of notifying ASIC of large numbers of employees who provide claims handling and settling services on their behalf.
ASIC has made a legislative instrument, ASIC Corporations (Notification of Authorised Representatives) Instrument 2022/301, which exempts Authorised Representatives from the requirement to notify ASIC of the sub-authorisation of employees who provide a claims handling and settling service on their behalf. Authorised Representatives are persons (including companies) authorised to provide a financial service on behalf of an Australian Financial Services (AFS) licensee.
For example, a company engaged as an Authorised Representative to conduct claims management for an insurer may sub-authorise hundreds of employees. Without relief, the company would need to notify ASIC of any authorisation, change in details or revocation of authorisation for each of these employees.
The administrative burden caused by requiring Authorised Representatives to notify ASIC of each sub-authorisation and change in details of employees would be burdensome for industry, while producing limited consumer benefit.
The relief does not limit the substantive obligations that Authorised Representatives and AFS licensees owe to consumers. Consumers with complaints about the provision of a claims handling and settling service provider, or the conduct of an Authorised Representative or its employees, will still have access to the internal dispute resolution processes of the AFS licensee.
- ASIC Corporations (Notification of Authorised Representatives) Instrument 2022/301
- Explanatory Statement
The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 established claims handling and settling as a financial service. From 1 January 2022, certain persons providing claims handling and settling services must hold an AFS licence and comply with licensee obligations under the Corporations Act 2001.
ASIC Corporations (Notification of Authorised Representatives) Instrument 2022/301 modifies section 916F of the Corporations Act 2001 to extend an existing exemption from the obligation to notify ASIC of sub-authorised employees providing other types of financial services. The effect is that an Authorised Representative is not required to notify ASIC of the sub-authorisation of an employee to provide a claims handling and settling service in relation to general insurance and consumer credit insurance products.
The relief was granted following an application for relief from the Insurance Council of Australia (ICA). ASIC consulted with various industry, consumer and government stakeholders before deciding to grant the relief. A no action position was in place from 1 January 2022 while ASIC considered and consulted on the relief application.
Further information about claims handling and settling obligations can be found in INFO 253: Claims handling and settling: How to comply with your AFS licence obligations