Commonwealth Numbered Acts Commonwealth Numbered Acts
1 Section 9
Insert:
"claims handling and settling service " , when used in a provision outside Chapter 7, has the same meaning as in Chapter 7.
2 Section 9 (at the end of paragraph (a) of the definition of professional investor )
Add "whose Australian financial services licence covers the provision of financial services that are not limited to claims handling and settling services".
3 Section 761A (paragraph (b) of the definition of binder )
Repeal the paragraph, substitute:
(b) provide a claims handling and settling service, on behalf of the insurer as insurer, in relation to risk insurance products;
4 Section 761A
Insert:
"Cash Settlement Fact Sheet " means a Cash Settlement Fact Sheet required by section 948C to be given in accordance with Division 3A of Part 7.7.
"claimant intermediary " has the meaning given by section 761CAA.
"claims handling and settling service " has the meaning given by section 766G.
"insurance claims manager " has the meaning given by section 761DA.
"insurance fulfilment provider " means a person who carries on a business of providing goods or services to persons insured under insurance products in satisfaction of the liability of the insurers under those products.
5 After section 761C
Insert:
761CAA Meaning of claimant intermediary
(1) A person is a claimant intermediary if the person:
(a) carries on a business of representing persons insured under insurance products in pursuing claims under those products; and
(b) represents those persons insured for a benefit given as consideration for that service, whether a monetary benefit or otherwise and whether given to the person providing the services or another person nominated by that person.
(2) The regulations may prescribe circumstances in which a person is not a claimant intermediary despite subsection (1).
6 After section 761D
Insert:
761DA Meaning of insurance claims manager
(1) A person is an insurance claims manager if:
(a) the person carries on a business of providing claims handling and settling services on behalf of one or more insurers; and
(b) where the person, as part of that business, also provides goods or other services--providing claims handling and settling services on behalf of one or more insurers is the primary part of the business.
(2) The regulations may prescribe:
(a) circumstances in which, for the purposes of subsection (1), providing claims handling and settling services on behalf of one or more insurers is taken to be the primary part of a business carried on by a person; and
(b) circumstances in which, for the purposes of subsection (1), providing claims handling and settling services on behalf of one or more insurers is taken not to be the primary part of a business carried on by a person.
7 After paragraph 766A(1)(ea)
Insert:
(eb) provide a claims handling and settling service (see section 766G); or
8 After subsection 766B(7)
Insert:
(7A) A recommendation or a statement of opinion, or a report of either of those things, is not financial product advice if giving the recommendation, statement of opinion or report could reasonably be regarded as a necessary part of providing a claims handling and settling service.
(7B) The regulations may prescribe:
(a) circumstances in which giving a recommendation, statement of opinion or report could reasonably be regarded as a necessary part of providing a claims handling and settling service for the purposes of subsection (7A); and
(b) circumstances in which giving a recommendation, statement of opinion or report could not reasonably be regarded as a necessary part of providing a claims handling and settling service for the purposes of subsection (7A).
9 Subsection 766B(8)
Omit "and (7)", substitute ", (7) and (7A)".
10 At the end of Division 4 of Part 7.1
Add:
766G Meaning of claims handling and settling service
(1) A person provides a claims handling and settling service if:
(a) the person makes a recommendation, or states an opinion, in the following circumstances:
(i) the recommendation, or statement of opinion, is made in response to an inquiry by or on behalf of another person about an existing or a potential claim by the other person under an insurance product;
(ii) the recommendation, or statement of opinion, could reasonably be expected to influence a decision whether to continue with the existing claim or to make the potential claim; or
(b) the person assists another person to make a claim under an insurance product; or
(c) the person represents a person insured under an insurance product in pursuing a claim under the product; or
(d) the person assesses whether an insurer has a liability under an insurance product, or provides assistance in relation to such an assessment; or
(e) the person makes a decision to accept or reject all or part of a claim under an insurance product; or
(f) the person quantifies the extent of the insurer's liability to another person under an insurance product, or provides assistance in relation to the quantification of the extent of such a liability; or
(g) the person offers to settle all or part of a claim under an insurance product; or
(h) the person satisfies a liability of the insurer under an insurance product in full or partial settlement of a claim under the insurance product.
(2) For the purposes of this Act, a claims handling and settling service provided in relation to an insurance product is to be treated as having been provided to the insured under the insurance product (who may be a person insured as a third party beneficiary under the contract of insurance that constitutes the insurance product, within the meaning of the Insurance Contracts Act 1984 ).
11 At the end of Division 1 of Part 7.6
Add:
910D Insurance fulfilment providers taken to be acting on behalf of financial services licensees
An insurance fulfilment provider who:
(a) provides goods or services to a person insured under an insurance product in satisfaction of the liability of the insurer under the product; and
(b) has been engaged by a financial services licensee, or by another person on behalf of a financial services licensee, to provide those goods or services; and
(c) does not (apart from this section) provide those goods or services as a representative of the financial services licensee;
is taken to be acting on behalf of the financial services licensee in providing the goods or services.
12 After paragraph 911A(2)(ej)
Insert:
(ek) the service is a claims handling and settling service in relation to an insurance product, and the person providing the service is not one of the following:
(i) the insurer under the insurance product;
(ii) an insurance fulfilment provider who has authority from the insurer to reject all or part of a claim under the insurance product;
(iii) an insurance claims manager;
(iv) an insurance broker (within the meaning of the Insurance Contracts Act 1984 ) who provides the claims handling and settling service in relation to the insurance product on behalf of the insurer;
(v) a person who has provided, or has entered into an arrangement to provide, financial product advice to a person insured under the insurance product (including a person insured as a third party beneficiary under the contract of insurance that constitutes the insurance product, within the meaning of the Insurance Contracts Act 1984 ) and who also provides the claims handling and settling service on behalf of the insurer under the insurance product;
(vi) if the insurance product is prescribed by the regulations for the purposes of this subparagraph--a claimant intermediary representing a person insured under the product in pursuing a claim under the product;
(el) the service is a claims handling and settling service in relation to an insurance product and all of the following apply:
(i) the claims handling and settling service is provided under an arrangement between the issuer of the insurance product and a financial services licensee;
(ii) the issuer of the insurance product is prescribed by the regulations, or of a class prescribed by the regulations;
(iii) under the arrangement, the financial services licensee, or their authorised representatives, may provide the claims handling and settling service in relation to the insurance product;
(iv) the provision of the claims handling and settling service is covered by the financial services licensee's Australian financial services licence;
(v) the claims handling and settling service is provided to the insured as a retail client;
(em) the service is the provision of a claims handling and settling service in relation to an insurance product provided to a wholesale client under an arrangement between the issuer of the insurance product and a financial services licensee;
(en) the service is a claims handling and settling service of one of the following kinds:
(i) advice given by a lawyer, in a professional capacity as a lawyer, about matters of law, legal interpretation or the application of the law to any facts;
(ii) except as prescribed by the regulations--other advice given by a lawyer in the ordinary course of activities as a lawyer, that is reasonably regarded as a necessary part of those activities;
(iii) action taken by a lawyer, in a professional capacity as a lawyer, to determine whether an insurer is liable to another person under an insurance product, or to quantify the extent of the insurer's liability;
(iv) negotiation by a lawyer, in a professional capacity as a lawyer, of the settlement of a claim under an insurance product;
(v) other conduct by a lawyer, in a professional capacity as a lawyer and on behalf of another person, that could reasonably regarded as a necessary part of acting on instruction and for which the lawyer has not received and is not entitled to receive a benefit other than the payment of professional charges, the reimbursement for expenses incurred on behalf of the other person, or the payment on account of expenses to be incurred on behalf of the other person;
13 After paragraph 911B(1)(e)
Insert:
; (f) these conditions are satisfied:
(i) the service is a claims handling and settling service in relation to an insurance product; and
(ii) the principal holds an Australian financial services licence covering the provision of the service; and
(iii) either the provider is not a person described in subparagraphs 911A(2)(ek)(i) to (vi) (insurers etc.) or, if the provider is a person described in one of those subparagraphs, the claims handling and settling service is of a kind described in paragraph 911A(2)(en) (legal services);
(g) these conditions are satisfied:
(i) the service is a claims handling and settling service in relation to an insurance product; and
(ii) the principal is an authorised representative of a financial services licensee; and
(iii) the financial services licensee holds an Australian financial services licence covering the provision of the service; and
(iv) the authorisation by the financial services licensee covers the provision of the service by the authorised representative; and
(v) the authorised representative has entered into an arrangement with the provider for the provider to provide the service on behalf of the authorised representative and the financial services licensee; and
(vi) either the provider is not a person described in subparagraphs 911A(2)(ek)(i) to (vi) (insurers etc.) or, if the provider is a person described in one of those subparagraphs, the claims handling and settling service is of a kind described in paragraph 911A(2)(en) (legal services).
14 Paragraph 912A(1)(ca)
Repeal the paragraph, substitute:
(ca) take reasonable steps to ensure that its representatives comply with the financial services laws, except to the extent that:
(i) those representatives are insurance fulfilment providers; and
(ii) the financial services laws relate to the provision of claims handling and settling services by those representatives; and
15 At the end of subsection 916C(1)
Add:
; or (c) the only financial services provided by the person as authorised representative of any financial services licensee are claims handling and settling services.
16 Subsection 940C(1)
Omit "or a Statement of Advice", substitute ", a Statement of Advice or a Cash Settlement Fact Sheet".
17 After subsection 941C(7)
Insert:
Claims handling and settling service
(7A) The providing entity does not have to give the client a Financial Services Guide if:
(a) the financial service consists only of a claims handling and settling service; and
(b) the claims handling and settling service does not consist only of representing the client as a person insured under an insurance product in pursuing a claim under that product.
18 After Division 3 of Part 7.7
Insert:
Division 3A -- Cash Settlement Fact Sheet
Subdivision A -- When this Division applies
948B Situation in which this Division applies
This Division applies in relation to the provision of a claims handling and settling service in the following circumstances:
(a) the service is offering to settle all or part of a claim under a general insurance product using a cash payment;
(b) the service is provided:
(i) by a financial services licensee (the providing entity ); or
(ii) by a person (the providing entity ) in their capacity as authorised representative of a financial services licensee (the authorising licensee ), or of 2 or more financial services licensees (the authorising licensees ); or
(iii) by another person on behalf of a financial services licensee (the providing entity ), or on behalf of 2 or more financial services licensees (each of which is a providing entity );
(c) the service is provided to a person (the client ) as a retail client who is insured under the insurance product;
(d) cash payment is not the only option legally available to the client to settle the claim, or the part of the claim.
Subdivision B -- Requirement for a Cash Settlement Fact Sheet to be given
948C Obligation to give client a Cash Settlement Fact Sheet
(1) The providing entity must give the client a Cash Settlement Fact Sheet in accordance with this Division.
(2) A person contravenes this subsection if the person contravenes subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
948D Timing for giving a Cash Settlement Fact Sheet
The Cash Settlement Fact Sheet must be given to the client when the offer to settle all or part of the claim using a cash payment is made.
Subdivision C -- Contents of a Cash Settlement Fact Sheet
948E Title of Cash Settlement Fact Sheet
(1) The title "Cash Settlement Fact Sheet" must be used on the cover of, or at or near the front of, a Cash Settlement Fact Sheet.
(2) In any other part of the Cash Settlement Fact Sheet, "Cash Settlement Fact Sheet" may be abbreviated to "CSFS".
948F Content of Cash Settlement Fact Sheet
(1) A Cash Settlement Fact Sheet must contain:
(a) a statement outlining the options for settlement legally available to the client under the insurance product; and
(b) a statement setting out the sum insured under the insurance product; and
(c) a statement setting out:
(i) the total amount of the cash settlement being offered; and
(ii) the amount of each component of the total amount of cash settlement being offered (such as components representing the sum insured, additional payments relating to emergencies and ex gratia payments); and
(d) a statement that the client should consider obtaining independent legal or financial advice before settling; and
(e) if, despite accepting the offer, the client would be entitled under the insurance product to have the payout reviewed--an outline of the rights of review; and
(f) any other information prescribed by the regulations.
(2) The Cash Settlement Fact Sheet must be given in writing.
(3) The Cash Settlement Fact Sheet must be dated. The date must be the date on which the Cash Settlement Fact Sheet was prepared or its preparation completed.
(4) The Cash Settlement Fact Sheet may also contain other information.
(5) The information included in the Cash Settlement Fact Sheet must be worded and presented in a clear, concise and effective manner.
19 Paragraph 951A(b)
After "Statement of Advice", insert ", Cash Settlement Fact Sheet".
20 Subsection 952B(1) (paragraph (b) of the definition of defective )
Omit "a Statement of Advice, or is", substitute "a Statement of Advice, a Cash Settlement Fact Sheet, or".
21 Subsection 952B(1) (after subparagraph (b)(ii) of the definition of defective )
Insert:
(iia) if it is a Cash Settlement Fact Sheet--there is an omission from the Cash Settlement Fact Sheet of material required by section 948F; or
22 Subsection 952B(1) (after paragraph (c) of the definition of disclosure document or statement )
Insert:
(ca) a Cash Settlement Fact Sheet; or
23 Paragraph 952E(2)(a)
Repeal the paragraph, substitute:
(a) the representative gives (see subsection (5)) a person a disclosure document or statement that is one of the following, in circumstances in which the document or statement is required by a provision of this Part to be given to the person:
(i) a Statement of Advice;
(ii) a Cash Settlement Fact Sheet;
(iii) information, a statement or a copy of a record required by subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6) or (8) or 946C(2); and
24 Paragraph 952F(1)(b)
Repeal the paragraph, substitute:
(b) the licensee provides the representative with a disclosure document or statement, being:
(i) a Statement of Advice; or
(ii) a Cash Settlement Fact Sheet; or
(iii) information, a statement or a copy of a record required by subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6) or (8) or 946C(2); or
25 Subparagraph 952F(1)(c)(i)
After "a Statement of Advice,", insert "a Cash Settlement Fact Sheet,".
26 Paragraph 952G(1)(b)
Repeal the paragraph, substitute:
(b) the licensee provides the representative with a disclosure document or statement, being:
(i) a Statement of Advice; or
(ii) a Cash Settlement Fact Sheet; or
(iii) information, a statement or a copy of a record required by subsection 941C(5) or (7), 941D(2), 946AA(5), 946B(3), (6) or (8) or 946C(2); or
27 Subparagraph 952G(1)(c)(i)
After "a Statement of Advice,", insert "a Cash Settlement Fact Sheet,".
28 After section 952J
Insert:
952JA Offence if a Cash Settlement Fact Sheet does not comply with certain requirements
(1) A financial services licensee, or an authorised representative of a financial services licensee, commits an offence if:
(a) the licensee or representative gives (see subsection (3)) a person a Cash Settlement Fact Sheet in circumstances in which it is required by a provision of this Part to be given to the person; and
(b) the Cash Settlement Fact Sheet does not comply with section 948E.
Note: Failure to comply with this subsection is an offence (see subsection 1311(1)).
(2) For the purposes of an offence based on subsection (1), strict liability applies to paragraph (b) of that subsection.
(3) In this section, give means give by any means (including orally), and is not limited to the meaning it has because of section 940C.
29 Subsection 953A(1) (paragraph (b) of the definition of defective )
Omit "a Statement of Advice, or is", substitute "a Statement of Advice, a Cash Settlement Fact Sheet, or".
30 Subsection 953A(1) (after subparagraph (b)(ii) of the definition of defective )
Insert:
(iia) if it is a Cash Settlement Fact Sheet--there is an omission from the Cash Settlement Fact Sheet of material required by section 948F; or
31 Subsection 953A(1) (after paragraph (c) of the definition of disclosure document or statement )
Insert:
(ca) a Cash Settlement Fact Sheet; or
32 In the appropriate position in subsection 1317E(3)
Insert:
|
subsection 948C(2) | obligation to give client a Cash Settlement Fact Sheet | uncategorised |
33 In the appropriate position in Chapter 10
Insert:
Part 10.48 -- Application and transitional provisions relating to Schedule 7 to the Financial Sector Reform (Hayne Royal Commission Response) Act 2020
In this Part:
"commencement day " means the day on which Schedule 7 to the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 commences.
"transition period " has the meaning given by section 1675B.
1675A Application of claims handling and settling services reforms
Subject to this Part, the amendments made by Schedule 7 to the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 apply to claims made under insurance products, or potential claims that arise under insurance products, on or after the commencement day.
(1) For the purposes of this Part, the transition period for a person begins on the commencement day and ends on:
(a) if the person lodges an application for an Australian financial services licence covering claims handling and settling services and ASIC gives the applicant notice in writing on or before 30 June 2021 that the application is granted--the last licence-processing day; or
(b) if the person lodges an application for an Australian financial services licence covering claims handling and settling services, the application complies with section 913A and is pending on 30 June 2021--the earlier of:
(i) if, after 30 June 2021, the person withdraws the application--the day on which the application is withdrawn; and
(ii) if, after 30 June 2021, ASIC notifies the person in writing that ASIC refuses to receive the application under subsection 1274(8)--the day on which ASIC gives that notification; and
(iii) if ASIC refuses to grant the person an Australian financial services licence covering claims handling and settling services--the day on which ASIC gives the person notice in writing of the refusal; and
(iv) the last licence-processing day; or
(c) if the person lodges an application for ASIC to vary the conditions on the licence to specify that claims handling and settling services are financial services that the licensee is authorised to provide and ASIC gives the applicant notice in writing on or before 30 June 2021 that the application is granted--the last licence-processing day; or
(d) if the person is a financial services licensee and lodges an application for ASIC to vary the conditions on the licence to specify that claims handling and settling services are financial services that the licensee is authorised to provide, the application complies with paragraph 914A(2)(b) and is pending on 30 June 2021--the earlier of:
(i) if, after 30 June 2021, the person withdraws the application--the day on which the application is withdrawn; and
(ii) if, after 30 June 2021, ASIC notifies the person in writing that ASIC refuses to receive the application under subsection 1274(8)--the day on which ASIC gives that notification; and
(iii) if ASIC refuses to grant the person the variation--the day on which ASIC gives the person notice in writing of the refusal; and
(iv) the last licence-processing day; or
(e) otherwise--30 June 2021.
(2) In this section:
"last licence-processing day " means the later of:
(a) 31 December 2021; and
(b) if the Minister determines another day under subsection (3)--that other day.
"pending " : an application is pending on a particular day if the application has been lodged on or before that day and each of the following is satisfied:
(a) the application has not been withdrawn by the applicant on or before that day;
(b) ASIC has not, on or before that day, given the applicant notice in writing that the application has been granted or refused;
(c) ASIC has not, on or before that day, notified that applicant in writing that ASIC refuses to receive the application under subsection 1274(8).
(3) The Minister may, by notifiable instrument, determine a day that is after 31 December 2021 and before 1 July 2022 to be the last licence-processing day.
1675C Application during transition period
(1) Despite section 1675A, a claims handling and settling service provided by or on behalf of a person during the transition period for that person is not to be treated as a financial service, except for the purposes of:
(a) section 912C; and
(b) section 912CA; and
(c) section 912E.
(2) Nothing in this section prevents:
(a) a financial services licensee from giving a person a notice under section 916A during the transition period for the licensee authorising the person to provide claims handling and settling services after the end of that transition period; or
(b) an authorised representative of a financial services licensee giving an individual written notice under section 916B during the transition period for the licensee authorising that individual to provide specified claims handling and settling services or claims handling and settling services on behalf of the licensee after the end of the transition period for the authorised representative.
34 In the appropriate position in Schedule 3
Insert:
| Subsection 952JA(1) | 30 penalty units |