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Claims Handling and Settling Requirements

Friday 9 April 2021

The Australian Securities regulator reminds regulated entities that as of 1 January of this claims handling and settling and ‘financial service’ and covered by the Australian Financial Services License (AFSL). 
Australian Securities and Investments Commission (ASIC) also reminds that if entities have to lodge a complete 30 June they will be in breach if they do provide claims handling and settling services. 
“Some applications received have also needed to be re-submitted because of their poor quality,” ASIC Deputy Chair Karen Chester said in a recent release this week.
Last year, saw the release of the draft information sheet insurance claims handling and settling. 
This comes after the Financial Sector Reform Response (Hayne Royal commission Response) Bill 2020 which requires all ‘persons’ providing claims handling and settling services will need to be covered by an Australian Financial License and the conduct obligations under Section 912A of the Corporation Act 2001.
ASIC highlighted that the entities that already have a license will need to apply for the appropriate licensing variation. 
ASIC states that the draft information sheet holds:

  • 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.
  • 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, and
  • refers to existing regulatory guidance on how to meet the general obligations under section 912A of the Act and indicates how the obligations may be tailored to claims handling.
Chester indicated that those that submit after 7 May run the risk of being rejected at the 30 June deadline. The regulator warned that this means that this might mean that the applicant would not have enough time to rectify their application.