No AFS licence for general insurers

The corporate regulator has released a consultation paper detailing proposals to allow general insurers to operate without a licence, and has provided guidance to help advisers tell the difference between general advice and personal advice.

The consultation paper, which is the first of eight projects which the Australian Securities and Investments Commission (ASIC) is implementing to assist advisers cope with the Government’s proposed refinements to financial services reform, invites comments on their proposal to allow distributors to provide dealing services relating to general insurance products without needing to be an Australian Financial Services (AFS) license holder or authorised representative.

ASIC’s director of policy Mark Adams said the proposal was intended to promote consumer access to general insurance products while reducing legal uncertainty and administrative costs for insurance industry participants.

The proposed relief would apply where, among other things, the distributor had arranged for the issue of certain Australian general insurance products and the insurer had accepted responsibility for the distributor’s conduct.

Adams said ASIC was aware that some insurers and insurance intermediaries might have concerns about the limited scope of the proposed relief.

“For example, they might be concerned that it does not apply to distributors for whom an insurance broker (rather than the insurer) accepts responsibility or that the relief does not apply to a wider range of dealing services.

Meanwhile, the guidance paper, which is the second of ASIC’s eight exercises, says that advisers can use their own words when giving a general advice warning, and that a general advice warning can still be given even if an adviser knows their client’s personal details.

Consultation on the first exercise closes on Friday September 2, 2005 and a final policy on the refinement is due for issue by the end of this October.