Insurance claims handling should not be subject to the same obligations as financial advice, according to major superannuation funds body, the Association of Superannuation Funds of Australia (ASFA).
In a submission filed with the Federal Treasury in response to moves to make insurance claims-handling a financial service, ASFA also urged against making it a requirement for superannuation funds to obtain an Australian Financial Services License (AFSL), noting that not all funds are currently licensed.
“… not all RSE licensees hold an AFSL,” it said. “ASFA considers that while such licensees should be held to account in the same way as other trustees, it would be beneficial if RSE licensees were not required to obtain an AFSL for the sole purpose of satisfying this claims handling obligation.
“ASFA would be happy to establish a consultation group made up of ASFA members to assist ASIC if it wishes to explore these issues further and to ensure that this reform is adapted to the superannuation environment to achieve its purpose as efficiently as possible.
“Finally, ASFA acknowledges that the consultation paper has already identified this as a risk but we wish to emphasise the importance of claims handling obligations being kept separate from those related to financial, especially personal, advice,” the submission said.
“If claims handling were to be regarded as subject to the financial advice obligations, fund members would suffer increased costs and delays due to disclosure requirements and limits on the range of information that could be provided with no obvious additional benefit to the fund member,” it said.
The submission said that while ASFA supported the Royal Commission recommendation that insurance claims handling be made a financial service it believed insurance inside superannuation needed to be treated in a different manner to insurance outside superannuation.
“…we consider that insurance in superannuation needs to be viewed differently from insurance provided outside the superannuation environment. A different approach may be required for the treatment of RSE licensees to ensure that the same objectives are achieved both within and outside the superannuation system,” it said.