Claims Handling Licensing Requirement Update

Claims Handling Licensing Requirement Update

AFA News 15 April 2021. On Thursday 8 April 2021, ASIC issued a media release encouraging participants in the claims handling market, who either need an AFSL or need to vary their existing AFLS, to apply prior to 9 May 2021.  Anyone wishing to continue to provide these claims handling services after 30 June 2021, who needs a licence or an authorisation, must have submitted a complete application by 30 June 2021.  Advice licensees will sensibly be asking the question – “does this apply to me?”

Treasury consulted earlier this year on a draft regulation that would provide an exemption for financial advisers who are operating as intermediaries in the claims handling process. The AFA has provided feedback to Treasury on areas where the proposal can be improved, including allowing the exemption to apply to new clients and to other staff within an advice practice.  In our view, the exemption should apply more broadly in the financial advice sector and not just apply to financial advisers. We are expecting this regulation to be finalised over the next couple of weeks. Hopefully, this regulation will provide a full exemption for financial advisers and their businesses, and therefore remove the need for a licence variation.  Licensees should keep an eye out for this and then quickly assess whether it provides an appropriate solution, before considering whether it is necessary to apply for a licence variation.

In the media release from ASIC, they acknowledge that a regulation is expected with respect to relief for intermediaries and that they will update their guidance once this has been released.  ASIC is dealing with many different groups who are impacted by this legislation, and who need to submit an application by 30 June 2021. Their message was not targeted at financial advisers.

We appreciate that this matter is causing some concerns for the financial advice sector and hope that we will have greater clarity in the very short term.

For any questions, please contact the AFA Policy team at policy@afa.asn.au.

Issued 15.04.2021. AFA Policy & Education Update