FSC releases enforceable occupational exclusion standard

The Financial Services Council (FSC) has sought to take the initiative by releasing an enforceable Standard which will remove occupational exclusions and occupation based restrictive disability definitions in default life insurance cover inside superannuation.

Releasing the Standard, FSC chief executive, Sally Loane said the Government’s ‘Your Future, Your Super’ reforms introduced an important consumer protection to ‘staple’ superannuation members to their fund, so that they take their superannuation account with them from job to job. Stapling will save consumers $1.8 billion in unnecessary fees over the next three years.

“However, under these arrangements some consumers may be unable to claim on their life insurance cover because their fund has occupational exclusions and occupation based restrictive disability definitions in the default cover they offer to their members,” she said.

“Wanting to avoid this, the FSC and its life insurance and superannuation members have introduced an enforceable Standard to end the use of these types of exclusions, which will take effect from 1 January 2023, following a one-year transition period.”

Loane’s statement said the Standard applied to both FSC superannuation and life insurance members, “while creating a powerful new industry norm for non-FSC superannuation funds”.

“The design was developed after public consultation with retail and industry superannuation funds, life insurers and consumer advocates.”

“FSC analysis shows that by applying the Standard to the FSC’s superannuation members, the Standard will remove 87% of all occupational exclusions and occupation based restrictive disability definitions that currently exist in the industry, by 1 January 2023.”

“An obligation on life insurers to not offer occupational exclusions and occupation based restrictive disability definitions to any superannuation trustees, together with ongoing consolidation in the superannuation sector and a powerful new industry norm is expected to see the remaining use of these terms removed in the near term.”

“This Standard demonstrates that when policy settings change, the life insurance and superannuation sectors will take proactive steps to protect consumers. The FSC is very pleased to be working with our members to deliver on this goal,” Loane said.