An update on the release of the Royal Commission interim report, plus policy responses. 

The release of the Royal Commission interim report last month was the first part of Commissioner Hayne’s consideration on what has been an unprecedented period of scrutiny of our sector. A comprehensive and considered policy response from the FSC, with considerable input from members, is well underway.

My public statement on the Interim Report focused on the need to take responsibility for the practices that have over a number of years fallen below community expectations and resulted in some poor outcomes for many consumers. As I said at the time, a culture transformation is well overdue – and I do know for all of you this process is already well underway.

Having been through almost 30 reviews and inquiries since the global financial crisis, and a large volume of legislative reform, there is no doubt that the financial services sector is highly regulated. It was telling that one of the leading questions Commissioner Hayne posed in his report was whether we need more regulation or if existing rules must be better enforced.

We believe a policy response must be enacted quickly to improve outcomes for consumers and set us on our long path towards strengthening trust. That process has already begun.

Policy responses:

Having received input from industry, consumer groups and the regulators, as well as looking to practices overseas, we are very close to releasing the next iteration of the FSC Life Insurance Code of Practice for extensive public consultation.

This version will build upon the life insurance industry’s commitment to enhance consumer protections and establish best practice in a number of important areas including mental health, claims handling and product sales.

For the first time the Code will also extend to third-party distributors and a standalone chapter will bind FSC superannuation trustees to their own set of mandatory requirements.

It is crucial that everyone with an interest in the Code is given ample opportunity to have their say. We are in the process now of planning a program of events to ensure we reach as many people as possible. Further details will be announced in due course. I urge our life insurance members to give this process their full support.

Another terrific policy initiative well underway is the FSC Data Collection Project. This is a massive undertaking and would not have been possible without a multi-million dollar investment from our life insurance members.

Working with ASIC and APRA, the FSC has been developing a standardised, industry-wide approach to the collection of industry data to enable us to show how much is paid out in claims per impairment, broken down by dollar value and by the number of Australians that receive the benefit.

The database will give the industry an evidence-base to design better products for the future. It will also help insurers find ways to become more efficient, improving affordability for consumers and supporting the sustainability of the industry. The vision for the project is that, over time, standardised data collection will extend to underwriting as well.

Away from the Royal Commission, pre- and post-retirement remains a crucial agenda focus for superannuation funds, investment managers and advice licensees alike. Rest assured the FSC will be pursuing a comprehensive policy initiative in this area through the rest of this year and into 2019.

Lastly, we look forward to seeing as many of you as possible at the FSC Life Insurance Conference on March 21 2019 - early bird tickets are now available. Don't miss out.  

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