REPRESENTATION: 2023 IN REVIEW

While it’s safe to say 2022 was dominated by the Quality of Advice Review, NIBA’s policy and advocacy work for 2023 has focused on a varied range of issues across both state and federal government. Below is a sample of the issues and submissions NIBA engaged on throughout the year. As always, NIBA’s advocacy would not be as strong if not for the work of our divisional committees and members- we thank you for your insight and support over the past year.

Senate Review Of Asic Investigation And Enforcement

The year kicked off with the Parliamentary Joint Committee on Corporations and Financial Services review of ASIC investigation and enforcement. The Review, which was referred to the Committee in late 2022, considered the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct.

In particular, the Review focused on whether ASIC was meeting the expectations of government, business, and the community with respect to regulatory action and enforcement and the range and use of the regulatory tools available to ASIC and their effectiveness in contributing to good market outcomes.

NIBA’s submission highlighted the challenges of a one-size-fits-all approach to financial services regulation and the impact this approach has on advisers and their clients, especially in the wake of the Royal Commission.

2023-24 PRE-BUDGET SUBMISSION

In the lead-up to the 2023-24 Budget, the Federal Government called for submissions from individuals, businesses and community groups on their views regarding priorities for the upcoming Budget. NIBA provided a submission outlining measures that it believes would increase household resilience to natural disasters.

In its submission, NIBA called for the expansion of the newly established Disaster Ready Fund (DRF) to allow Australian homeowners in disaster-prone areas to undertake urgent household-level disaster mitigation projects.

While reiterating its support for the public mitigation measures that are proposed to be funded by the DRF, the submission highlighted that for many communities, public mitigation works will have little impact on improving resilience to natural disasters and that household-level mitigation works should be carried out in lieu of/to complement community-level mitigation.

The submission highlighted that such a program would have a number of benefits including reducing the risks and costs associated with recovery from natural disasters, contributing to the economy by creating jobs and stimulating investment in the construction and engineering sectors, promoting community resilience and reducing insurance premiums.

SENATE SELECT COMMITTEE ON AUSTRALIA’S DISASTER RESILIENCE

Late last year, the Senate Select Committee on Australia’s Disaster Resilience was appointed by the Senate to inquire into Australia’s preparedness, response and recovery workforce models, as well as alternative models to disaster recovery.

NIBA’s submission to the Committee reiterated its call for increased investment in disaster mitigation through the expansion of the Disaster Ready Fund to enable homeowners in disaster-prone areas to undertake household-level disaster mitigation projects.

The submission pointed to the success of the Queensland Government’s Household Resilience Program, which allowed homeowners in northern Queensland to undertake cyclone resilience works on their property.

NIBA’s encouraged the Federal Government to work closely with the general insurance industry to ensure that mitigation works would be recognised by insurers when determining premiums so as to encourage homeowner participation.

An interim report was released in September, with 4 recommendations, the final report is expected to be tabled by April 2024.

Afca Rules And Operation Guidelines Review

In May, the Australian Financial Complaints Authority (AFCA) announced it would undertake public consultation on proposed changes to its official rules and operational guidelines in light of the recommendations of the Treasury-led Independent Review of AFCA.

AFCA proposed changes to its Rules and Operational Guidelines in the following areas:

1. Ensuring complaints do not progress to case management or decision status where an appropriate offer of settlement has already been made.

2. Excluding complaints that share the same subject matter and content as a previously discontinued complaint.

3. Enabling AFCA to not consider complaints lodged by a “paid representative” where they do not hold an ACL/AFSL or are not acting in the client’s best interests and where appropriate exclude them from lodging future complaints for up to 12 months.

4. Excluding complaints who submit multiple complaints that are closed or discontinued by AFCA.

5. Discontinuing complaints because of unreasonable and inappropriate conduct including bullying, harassment, intimidation, and abuse.

6. Enabling AFCA to discontinue a complaint where the complainant has not suffered any loss.

7. Minor changes to definitions and language to update certain areas of the Rules arising from legislative changes, to provide greater clarity and transparency of the scheme’s operation overall.

NIBA’s submission was largely supportive of the changes, as they would prevent financial firms from incurring fees where they have made genuine attempts to compensate the complainant for financial loss, or where the complaint had previously been discontinued. Following consultation, the proposed changes were submitted to ASIC for approval with the approval process expected to be finalised by the end of the year.

INQUIRY INTO INSURERS’ RESPONSES TO 2022 MAJOR FLOOD CLAIMS

NIBA provided a submission to the House of Representatives Standing Committee on Economics inquiry into insurers’ responses to 2022 major flood claim. The inquiry looked at such areas as;

• the experiences of policyholders before, during and after making claims;

• the different types of insurance contracts offered by insurers and held by policyholders;

• timeframes for resolving claims;

• obstacles to resolving claims, including factors internal to insurers and external, such as access to disaster-impacted regions, temporary accommodation, labour market conditions and supply chains;

• insurer communication with policyholders;

• accessibility and affordability of hydrology reports and assessments to policyholders;

• affordability of insurance coverage to policyholders;

• claimants’ and insurers’ experience of internal dispute resolution processes; and

• the impact of land use planning decisions and disaster mitigation efforts on the availability and affordability of insurance.

NIBA’s submission was developed based on feedback received from members and NIBA divisional committee members and focused on the handling of vulnerable clients, delays in processing claims, increases in AFCA and IDR complaints and the availability and affordability of insurance.

The committee will provide a final report by 30 September 2024.

Tasmanian Fire Levy

Following consultation in late 2021, the Tasmanian Government released the draft Tasmania Fire and Emergency Services Bill for consultation.

The Bill would significantly overhaul the states’ fire and emergency services funding, including abolishing the levy on commercial insurance policies.

NIBA’s submission encouraged the government to implement the reforms as a priority, noting that the current model fails to meet the characteristics of an effective tax system; fairness, simplicity, adequacy, transparency, and administrative ease.

Quality Of Advice Review

The year closed with the Quality of Advice Review, with the government releasing the first tranche of legislation to introduce a number of recommendations made by the Independent Reviewer, Michelle Levy. Among the reforms to be introduced in this first stage are;

• Introducing client consent requirements for life insurance, general insurance and consumer credit insurance commissions; and

• Amending FSG requirements to allow providers greater flexibility in the way they provide disclosure documents.

NIBA provided feedback supporting the draft legislation, in particular, NIBA praised the government for taking industry feedback on board to ensure that the commission consent requirements would not result in clients being left uninsured if advisers were required to wait for consent prior to renewing cover.

For more information on the proposed reforms, see page 12.