FSC updates consumer protection standards

Yasmine Raso

Senior Journalist, Financial Newswire

3 July 2023

The Financial Services Council (FSC) has announced several changes from 1 July for financial services products, superannuation funds and life insurance policies to better protect consumers’ interests.

The New Life Insurance Code of Practice will kick off the 2024 financial year by enforcing over 50 new protections for consumers across all life insurance practices, systems and products including product design, sales practices and claims processes.

The updated code also includes enhanced protections for customers experiencing periods of vulnerability or financial hardship and with mental health conditions. Alongside the new code, the FSC also released a guide and factsheet for consumers to understand their rights and obligations under life insurance law and to remain informed about life insurance premiums.

“The changes will better empower Australians in managing their superannuation, provide enhanced consumer protections in the life insurance sector and change the way the financial services industry approaches the design and distribution of products to consumers,” FSC chief executive, Blake Briggs, said.

The FSC has also revised its enforceable standard for group life insurance claims handling in superannuation by making it compulsory for all FSC superannuation members to align with the protections outlined in the New Life Insurance Code of Practice.

The standard ensures trustees remain committed to helping their members navigate the claims process easily and securely, which involves making a claim on their insurance, keeping track of the timeframes to assess claims, understanding the life insurer’s decision and guaranteeing accepted claims are paid efficiently to the member.

The new financial year will also see funds management products subject to an updated Target Market Determination (TMD) template, as part of the Design and Distribution Obligations (DDO) regime, to improve industry compliance and customer outcomes while also tackling concerns from corporate regulator, the Australian Securities and Investments Commission (ASIC), about the adoption of the regime across the industry.

“The updates to the FSC’s template TMDs reflect our ongoing commitment to creating a fair and transparent financial landscape that serves the best interests of all Australians,” Briggs said.