In a recent communication to members, the AFA said the finalised Financial Sector Reform (Hayne Royal Commission Response) (Claimant Intermediaries) Regulations 2021, released earlier this month, provided the clarity the advice industry needed around the new licensing regime for insurance claims.
“The government has released a regulation that will provide an exemption for financial advisers from the need to vary their AFSL in order to provide claims handling,” the association said.
“This regulation provides an exemption for individually licensed advisers and authorised representatives. It appears to meet the needs of the small business financial adviser population.”
The news comes following submissions made to the draft regulations earlier this year by the AFA.
The draft originally stated that while advisers would be handed a carve-out from the new rules, advisers were defined as someone who “holds an AFSL that authorises the adviser to provide financial product advice … and provides personal advice to a person as a retail client … and the adviser represents the person in pursuing a claim under an insurance product”.
The new rules have come into place as a result of royal commission legislation passed late last year, which brought life insurer claims handling into the AFSL regime following a number of case studies around poor claims handling by insurers at the inquiry.
The legislation originally appeared to suggest that advisers may also require an additional licence authorisation to assist with a client’s insurance claim.
The AFA said while the final regulation did not make mention of staff as well as advisers when referring to the exemptions, the explanatory memorandum attached to the regulations did make mention of advice practice staff specifically.
