The FSC is committed to considering ASIC approval of the Code for its second iteration. 

Life Code and ASIC registration

By Bianca Richardson, Senior Policy Manager, FSC

The first ever Life Insurance Code of Practice for consumers came into effect on 1 July 2017. 

Mandatory for all FSC life insurance members, it sets out the life insurance industry’s key commitments to consumers on standards of practice, disclosure and principles of conduct. It sets timeframes for insurers to respond to claims, requests and customer interaction. 

The Life Code is a strong commitment to consumers of which the FSC and the life insurance industry is very proud. 

The Code was strengthened ahead of its launch with a foundation of new minimum standard medical definitions for cancer, heart attack and stroke for use in trauma/critical illness policies. These illnesses make up the majority of trauma and critical illness claims. The new definitions have been developed with the assistance of medical professionals and will be under continual review to ensure they are in keeping with advancements in medical science.

 For those who are not familiar with trauma or critical illness policies, the minimum definitions don’t extend to insurance in superannuation, income protection or TPD cover because critical illness cover cannot be held through superannuation. Income protection and TPD cover are focused on whether you are too ill to work and not whether you have a specific illness. 

What ASIC Code registration means

There has been great discussion and interest in ASIC approved codes of conduct in recent times, and, contrary to some reports, the FSC has committed to considering ASIC approval of the Code for the second iteration. 

There does seem, however, to still be some misunderstanding about what ASIC approval of codes means. 

In 2013 ASIC released Regulatory Guide 183 setting out ASIC’s approach to approval for codes of conduct. Whilst the framework has been in place for a number of years, only two codes to date have been approved by ASIC. 

In developing the Life Code the FSC very much took into account ASIC code guidance and ensured that the key tenets of ASIC approved codes were imbedded. That is, our code sets out a comprehensive body of rules, developed in consultation with stakeholders, which FSC members are required to adhere to. 

The code also sets out obligations for monitoring, enforcement and sanctions and there is a robust external governance framework in place. 

The Life Code Compliance Committee (LCCC) is responsible for monitoring and enforcing the Code, and comprises a representative from industry, a consumer representative and an independent chair. This body is administered by the independent Financial Services Ombudsman (FOS). 

In line with ASIC code approval requirements, the Life Code will also be subject to an independent review no less than every three years. 

The FSC is very proud of the Code, which is a new Standard for the FSC and written very deliberately for consumers and in a way which they can easily understand it.

Whilst the Life Code, along with the majority of financial services industry codes, are not ASIC approved, this does not mean they are not robust, that they lack strong governance, or that they don’t have significant consumer value. These were all key attributes which were considered in the development of the Life Code.

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