Consumer groups reject FSC rehabilitation proposal

FSC rehabilitation

17 May 2018
| By Mike |
image
image
expand image

The Financial Services Council (FSC) has hit a substantial consumer group obstacle in its push to allow life insurers to enter the health insurance space with the aim of getting injured workers back to work sooner.

Key consumer groups the Financial Rights Legal Centre, Consumer Action Law Centre and Choice have told a Parliamentary Committee that there is a high risk of the life insurers having conflicts of interest in such arrangements.

“There are significant issues that would come into play if life insurers were to play a larger role in rehabilitation – particularly the obvious conflicts of interest that arise with life insurers having a financial interest in encouraging rehabilitation even where it may not be appropriate, in order to decrease or cease ongoing income protection (IP) or total and permanent disability (TPD) payments,” the submission said.

The submission, filed with the Parliamentary Joint Committee on Corporations and Financial Services argued that “the protection, support and best interests of incredibly vulnerable consumers must be front and centre of any proposed reform in this area”.

Elsewhere in the submission, the consumer groups referred to the likelihood of “a clear conflict of interest and ‘perverse incentives’ in a system where the insurer is both the payer of claims and is involved in arrangements for claimants to return to work”.

It said the consumer groups supported the view that there needed to be an “arms-length” relationship between the two activities.

“On its face, this type of system would exacerbate the risk of insurers positively assessing people’s ability to work and forcing them into work when it is unsuitable or premature,” it said. “An increase in people being pressured by insurers into returning to work when it is not appropriate is the most significant risk in the FSC’s proposal.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

8 hours ago

Interesting. Would be good to know the details of the StrategyOne deal....

4 days 13 hours ago

It’s astonishing to see the FAAA now pushing for more advisers by courting "career changers" and international recruits,...

3 weeks 2 days ago

Insignia Financial has made four appointments, including three who have joined from TAL, to lead strategy and innovation in its retirement solutions for the MLC brand....

2 weeks 4 days ago

A former Brisbane financial adviser has been charged with 26 counts of dishonest conduct regarding a failure to disclose he would receive substantial commission payments ...

3 days 11 hours ago

Pinnacle Investment Management has announced it will acquire strategic interests in two international fund managers for $142 million....

2 days 14 hours ago