The corporate regulator has voiced alarm at the number of insurance claims handling firms that have applied for licences to continue providing the services, with less than three months to the June 30 deadline for paperwork to be submitted.
The Australian Securities and Investments Commission (ASIC) says it has received fewer than 15 applications to date and some of the applications need to be re-submitted because of their poor quality.
“Time is running out for firms to lodge their applications with ASIC,” Deputy Chairman Karen Chester said.
“We are concerned that firms are running the risk of not submitting a complete application in time to get the benefit of the legislated transition period.
“Firms need to submit an application no later than May 7. Failing to do so poses a real risk that these firms will have to stop providing claims handling and settling services after June 30.”
Since the start of the year, claims handling and settling is a financial service that requires a licence by January 1 next year under new laws that were passed last December.
As part of the 12 month-transition to the new regime, firms that must hold an Australian Financial Services (AFS) licence must lodge an application or variation request by June 30 in order to continue to provide claims handling and settling services, while ASIC assesses their application.
Failure to submit a complete application by or on June 30 means a firm will be in breach of the laws if they continue to provide claims handling and settling services from July 1.
The licensing requirement applies to insurers, insurance claims managers, tradespersons who can reject claims on behalf of an insurer, and claimant intermediaries who are defined as “people that run a business representing customers to pursue insurance claims for reward”.
ASIC says it has made minor changes to the draft information sheet it released last November seeking stakeholder input about the claims handling reforms.
The changes and other updates are contained in INFO 253, the corporate regulator’s final claims handling and settling service information sheet.
INFO 253 sets out who needs to be authorised to provide claims handling and settling services for insurance products and who can act on an AFS licensee’s behalf.
It also explains how and when to apply for an AFS licence, or variation to an existing AFS licence, including materials that are needed to support an application.
ASIC anticipates that the Government will make further regulations in relation to persons who are claimant intermediaries and will update INFO 253 when the changes are finalised.
Click here to access INFO 253.