AFS Licensee’s must; have a dispute resolution system (process) that complies with standards and requirements made or approved by ASIC and covers complaints made by [retail] clients in connection with the provision of the financial services; and, be a member of AFCA. (refer s912A(1)(g) and (2) Corporations Act). The licensee’s IDR must include complaints against representatives including authorised representatives. It follows that authorised representatives must immediately notify the licensee about the complaint. In addition, subscribers to the GI Code of Practice and Insurance Brokers Code of Practice must comply with parts 11 and 9.0, respectively. Understanding the nuances of RG 271 – enforceable paragraphs The general obligation for IDR in section 912A(1) gives rise to a legal obligation imposed on the Licensee. However, the legal requirement only applies to the enforceable paragraphs in RG 271and not all paragraphs RG 271. Any paragraph that is not identified by ASIC as an ‘enforceable paragraph’ in RG 271 is regulatory guidance only and not a legal requirement. (refer RG 271.8 and RG 271.9) What are the enforceable paragraphs of RG 271 for general insurance? definition of complaint RG 271.27 – RG 271.29 (including note) posts (that meet the definition of ‘complaint’ set out in RG 271.27) on a social media channel or account owned or controlled by the financial firm that is the subject of the post, where the author is both identifiable and contactable RG 271.32 small business complaints RG 271.36 outsourcing IDR processes RG 271.48 what an IDR response must contain RG 271.43- RG 271.54 (including notes) when an IDR response must be provided by RG 271.56 – RG 271.60 (including note) complaint management delays RG 271.64- RG 271.66 (including notes) complaints closed within five business days of receipt RG 271.71 IDR response within 5 business days RG 271.75 the role of customer advocates RG 271.109- RG 271.110 (including note 1) links between the IDR process and AFCA RG 271.111- RG 271.112 how to manage systemic issues RG 271.118- RG 271.120 (including note) accessibility of IDR process RG 271.134 no charges or detriment RG 271.141 resourcing and staff numbers RG 271.142 – RG 271.143 empowering staff and financial delegations RG 271.146- RG 271.147 maximum IDR timeframes and closing complaints RG 271.163 and RG 271.165 policy and procedures RG 271.172 data collection, analysis and internal reporting RG 271.179 report complaints data internally and publicly RG 271.183 Disclaimer: Reproduction of statements made in this article by media outlets, whether in full or in part, is strictly prohibited without the written express consent of the author. The views, opinions, and positions expressed within this article are those solely of the author and Compliance Advocacy Solutions Pty Ltd and not the views of other individuals, companies or organisations they may be affiliated with. The author and Compliance Advocacy Solutions Pty Ltd make no representations as to accuracy, completeness, currency, suitability, or validity of any information in this article and will not be liable for any errors or omissions or any loss or damage arising from […]
I’m often asked to outline what is involved in obtaining an AFS Licence in Australia for general insurance. I have assisted many people to obtain a new AFS Licence, vary an existing Licence and add new responsible managers. The process to obtain an AFS licence to provide general insurance services or products is not overly complex however, it is time-consuming and labour-intensive, as ASIC’s information requirements are specific. All AFS licence applications (new and variations) must be submitted via ASIC’s online regulatory portal. I assist my clients in setting their business up in the portal and providing me with access so that I can facilitate the application for them. My typical clients requiring a new AFS licence include: insurance brokers who are currently authorised representatives; people who want to operate an Underwriting Agency in Australia (including Lloyds coverholders); foreign companies that want to provide financial services in Australia; and people wanting to provide claim services either for insurers (insurance claim managers) or insureds (claimant intermediaries) I manage AFS Licence variations (including adding responsible managers) for insurers, brokers, underwriting agencies, claim service providers and anyone who currently has an AFS Licence for general insurance products Typical general insurance authorisations AFSL authorisations relevant for general insurance are: providing financial product advice including general financial product advice only; dealing including issuing (when acting on behalf of insurers) and dealing on behalf of another person (insurance brokers including obtaining the use of restricted broker terms); and claims handling and settling services on behalf of insurers or on behalf of an insured. The financial services can be provided to Retail and/or Wholesale clients. The AFS Licence application process The process for a new AFS Licence application is more involved and complicated than a licence variation. This example deals with a new AFSL application however I can assist you with information requirements and the process for variations on request. Contact me here ASIC provides guidance on the process and information requirements in RG 1 and INFO 294. People requirements Information must be provided to ASIC on your fit and proper people and your responsible managers. Fit and Proper people Section 913BA of the Corporations Act requires that, before a licence is granted, ASIC must be satisfied that there is no reason to believe that certain people involved in the management or control of your financial services business are not ‘fit and proper persons’ to undertake that role. You will need to include details of your fit and proper people in the application (refer RG 1.138 – 1.166). A fit and proper person is your ‘officers’ and this is defined in section 9 Corporations Act, relevantly to include: a director or secretary of the corporation; or person: (i) who makes, or participates in making, decisions that affect the whole, or a substantial part, of the business of the corporation; or (ii) who has the capacity to affect significantly the corporation’s financial standing; or (iii) in accordance with whose instructions or wishes the directors of the corporation are accustomed to act […]
Typically, for home building claims, a cash settlement payment is offered as a settlement option when a repairer can’t guarantee repairs due to concurrent wear & tear or maintenance issues. Under paragraph 86 of the GI Code of Practice, insurers who have authorised repairs must accept responsibility for the quality of the builders work and the materials they use. This clause has led to an unfair practice of offering cash payments as a first resort. Most customers aren’t aware of their rights at law and under the GI Code, and simply accept the cash settlement offer. Problems arise when repair costs escalate (due to the rising cost of living or petrol cost increases and commensurate impact on supply chain) and the risks associated with project managing repairs. The standard claims settlement process appears to be that whenever there is a mix of covered damage and damage caused due to wear and tear or lack of maintenance, there is a default to a cash settlement payment. This position is difficult to reconcile when the same builder (under the guise of an expert report) has clearly been able to distinguish between storm damage and wear & tear/maintenance and provides a causation report. Most consumers don’t want the inconvenience of having to arrange repairs, coordinate trades and generally project management the work. A simple solution would be to provide the customer with the option of being provided with a detailed Scope of Works itemising insurance covered work and excluded work. The Code guarantee would be provided for the insurance covered work with the customer acknowledging their liability and payment for excluded work. Regulatory view of cash settlements (and cash settlement fact sheets) Cash settlements and cash settlement fact sheets (CSFS) remain on the radar of regulators. ASIC We will review general insurers’ use of cash settlements to better understand the practices and disclosures surrounding the offers being made and to assess whether there are risks of consumer harm. ASIC Corporate Plan 2025-2026 Code Governance Committee As part of our 2024-25 workplan, we committed to reviewing the information insurers provided to customers on cash settlements and the processes they follow when deciding to offer a cash settlement. We note that, in the Industry Action Plan, insurers have committed to a range of actions to address recommendations relating to cash settlements. We also note ASIC’s recent report, finding that insurers need to provide better information to consumers around cash settlements. We will review what information insurers provide to customers, and what information those customers need to make effective decisions around cash settlements. CGC Priorities 2025-26 Cash Settlement Fact Sheets An insurer, underwriting agency or TPA acting on behalf of either must provide a cash settlement fact sheet where: the financial service is claims handling and settling; and the service is offering to settle all or part of a claim under a general insurance product using a cash payment; and the customer is a retail client; and the PDS provides repair or replacement as settlement options. […]
The power of enforcement – ASIC’s perspective In the Enforcement session opening speech by ASIC Deputy Chair Sarah Court at the ASIC Annual Forum, 13 November 2025, the following example was provided as ‘the power of enforcement.’ I want to start though, with a reflection on ASIC’s enforcement posture. We are often asked why ASIC needs to take a strong enforcement approach. The suggestion seems to be that we should rather call out the issue of concern, allow the firm involved to remedy it, and avoid the cost and uncertainty of court-based litigation. Apart from the obvious answer that we are not, and never will be, the compliance arm of large corporations, the following example is telling. ASIC Commissioners are frequently guests around board tables where we engage with directors and senior executives about the important work that we do. At one recent such engagement I mentioned a 2023 ‘pricing promises’ case ASIC had taken against insurer RACQ. RACQ ultimately admitted to this misconduct, which involved misleading documents sent on millions of occasions, to nearly half a million customers. They collectively missed out on some $86m worth of discounts. A significant penalty was imposed, and there was widespread media attention. A woman at the board table was a former senior executive of another insurer. While that insurer had long been aware of pricing promise issues and the potential for problems of its own, until that point those problems had been secondary. Following this court action, she said the focus changed overnight. There was an immediate review of all pricing promises, whereupon widespread irregularities were discovered. What was interesting about this swift reprioritisation was the broader industry context. The sector was well on notice of ASIC’s concerns on this issue, and there was widescale remediation in place. Despite that fact it was only court action against another like firm that finally prompted this insurer to review, reprioritise and remediate. Therein lies the power of enforcement. Civil penalties as an enforcement action in General Insurance Over recent time, ASIC has commenced the following Federal Court proceedings seeking civil penalties: IAL penalised $40 million over pricing discount failures ASIC alleges QBE misled customers over pricing discounts ASIC takes court action alleging RACQ sent half a million misleading insurance renewal comparisons Cbus ordered to pay $23.5 million penalty for serious failures in processing members death benefits and insurance claims It should be noted that CBus was a superannuation matter.. Legal principles relevant to orders sought by agreement in regulatory proceedings O’Callaghan J. in Australian Securities and Investments Commission v United Super Pty Ltd [2025] FCA 1453 summarised the position: [8] There is an important public policy involved in promoting predictability of outcome in civil penalty proceedings. The practice of receiving and, if appropriate, accepting agreed penalty submissions increases the predictability of outcome for regulators and wrongdoers. Such predictability of outcome encourages corporations to acknowledge contraventions, which, in turn, assists in avoiding lengthy and complex litigation and thus tends to free the courts to deal with other […]
Insurance brokers, Underwriting Agencies, TPAs, Claimant Intermediaries and Service Providers must take care in the use of certain words that are either restricted or their use may lead to misleading or deceptive conduct. Use of words “insurance” and “insurer” Section 114 Insurance Act places restrictions on the use of the words ‘insurer’ and ‘insurance’. This is relevant for discretionary mutual funds and warranties. Use of the word “insurance” A person commits an offence if the person carries on a business or is proposing to carry on a business; and the person uses the word insurance to describe (expressly or by implication) a product or service that the person supplies, or proposes to supply, in the course of carrying on the business; and the product or service is not insurance; and it is likely in all the circumstances (including the use of the word insurance ) that the product or service could be mistakenly believed to be insurance. Use of the word ‘insurer’ Use of the word “insurer” A person commits an offence if the person carries on a business or is proposing to carry on a business; and the person uses the wordinsurer to describe (expressly or by implication) the person in connection with a product or service that the person supplies, or proposes to supply, in the course of carrying on the business; and either: the product or service is not insurance; or the person would breach a requirement mentioned in subsection (3) [need to be authorised to carry on insurance business] if the person supplied the product or service in the course of carrying on the business; and in a case where the product or service is not insurance–it is likely in all the circumstances (including the use of the wordinsurer ) that the product or service could be mistakenly believed to be insurance. Insurance brokers receiving commissions, remuneration or benefits from insurer or underwriting agency Brokers who receive commissions, remuneration or benefits from an insurer or underwriting agency are not permitted to use the word independent , impartial or unbiased. Refer Section 923A Corporations Act Insurance brokers – restricted terms A person may only use the following terms if authorised by a condition on their AFS Licence: insurance broker, insurance broking or general insurance broker (Section 923B Corporations Act) Restricted terms in Advertising financial products and services Care should be taken when using certain terms and phrases in an advertisement, particularly where the way those terms and phrases are used is not consistent with the ordinary meaning commonly recognised by consumers (e.g. ‘free’, ‘secure’ and ‘guaranteed’). RG 234.91 Inappropriately using terms and phrases can: create expectations that cannot be met; indicate a certain level of security that does not exist; and indicate different levels of protection and different levels of risk. The use of such terms may lead to misleading or deceptive conduct. Use of technical language and industry jargon in advertising Industry concepts or jargon may not be well understood by many consumers and should be […]
As more and more Insurance Brokers move away from a commission only based remuneration model to charging client fees, questions arise around obligations in respect of fees. Principles of equity and indemnity apply to the charging of fees however regulations and the brokers Code also apply. Providing financial services efficiently, honestly and fairly. The overarching general obligation for AFSL Licensees to provide financial services to clients ‘efficiently, honestly and fairly’, extends to the systematic practice of charging fees. The phrase (‘efficiently, honestly and fairly’) has been subject to significant judicial analysis, it is clear that the general obligation of a Licensed insurance broker and their [authorised] representatives means that they must, relevantly: perform their functions to a reasonable standard of performance by an insurance broker that the public is entitled to expect; a broker must be ethically sound; and includes where a licensee pursues its own self-interest and disregards the best interests of its clients . Conflicts of interests An AFS Licensee must adequately manage its conflicts of interests. (refer RG 181 Section B) Insurance brokers have a fiduciary duty to their clients. Subject to any terms governing the fiduciary relationship including Terms of Engagement, a broker will need to act in the client’s best interests, prioritise their interests, not profit without consent, and address any conflicts. A broker must take this duty into account when complying with its conflicts management obligation. This will also inform the adequacy of their conflict management arrangements. (ASIC RG 181.22) Best interests obligations An insurance broker (includes licensees and authorised representatives) providing personal advice to a retail client must act in the best interests of the client. This duty requires the broker to have: identified the objectives, financial situation and needs of the client in respect of the subject matter; identified the subject matter of the advice; and make reasonable enquiries to obtain complete and accurate information relevant to the client’s circumstances. This activity should be included in the factors for calculating the fee in addition to arranging the insurance cover, policy administration and claims advocacy. FSG AFS Licensees and, independently their authorised representatives, must provide a FSG to a retail client before providing their financial services (i.e. before any advice is provided). The FSG must be up to date and contain information about the remuneration being received for providing the services. ASIC INFO 291 is informative Information about remuneration should be presented in one location and in a way that is easy for the client to understand, consistent with the requirement when a client requests more detailed remuneration information in regulations 7.7.04A(4) and 7.7.07A(4). This could include ranges, rates, comparisons, simple tables and formulas. Price fixing and Bid rigging Under the Competition and Consumer Act, cartel activity is illegal. Types of cartel activity include price fixing and bid rigging: A broking practice must not collude with another unrelated broking pratice(s) in connection with the fees being charged or proposed to be charged. Price fixing Competing businesses must not agree to fix, control or […]
𝐭𝐡𝐞 𝐢𝐦𝐩𝐨𝐫𝐭𝐚𝐧𝐜𝐞 𝐨𝐟 𝐚𝐝𝐞𝐪𝐮𝐚𝐭𝐞 𝐜𝐨𝐦𝐩𝐥𝐢𝐚𝐧𝐜𝐞 𝐦𝐞𝐚𝐬𝐮𝐫𝐞𝐬 ASIC has cancelled the Australian financial services (AFS) licence of securities dealer Pulse Markets Pty Ltd (Pulse Markets), effective from 11 February 2026. (ASIC Media Release 26-027MR) The licence was cancelled after ASIC found Pulse Markets had serious and sustained breaches of its duties under s912A of the Corporations Act 2001. These included Pulse’s failure to adequately supervise its corporate authorised representatives (CARs) providing financial services under its AFS licence, increasing the risk they will not comply with financial services laws and put clients at risk of financial loss. ASIC found that Pulse Markets failed to comply with its obligations, including failure to: maintain the competence required to provide the financial services it offered take reasonable steps to ensure that its representatives comply with the financial services laws by failing to: – undertake appropriate due diligence prior to the appointment of its CARs; – take adequate steps to monitor the websites and marketing of its CARs; – maintain adequate compliance, breach and incident registers; – and maintain compliance manuals with accurate information about AFS licence authorisations ensure adequate resources, including staffing, to provide the financial services covered by the licence and to carry out supervisory arrangements prepare and lodge financial statements (being a balance sheet and a profit and loss statement) for financial years 2024 and 2025 obtain an opinion by a registered company auditor regarding Pulse Market’s compliance with the financial conditions on their licence for the financial years 2024 and 2025 pay its Industry Funding Levy for the 2023-2024 financial year. Pulse Markets may apply to the Administrative Review Tribunal (ART) for a review of ASIC’s decision. Pulse Markets is a Queensland-based securities dealer and has held AFS licence number 220383 since 7 June 2002. The licence authorised Pulse Markets to provide financial product advice, deal in financial products and underwrite an issue of securities, for wholesale clients. Lessons for General Insurance It should be noted that Pulse Markets provided financial services to Wholesale clients. This case demonstrates that while firms operating in general insurance providing services to Wholesale Clients (typically Underwriting Agencies offering casualty or specialist general insurance products), don’t have some of the disclosure or other obligations of firms providing services to Retail Clients, they still have obligations that must be documented and managed. In addition, Authorised Representatives must be subject to due diligence, onboarding and ongoing monitoring and supervision irrespective of whether providing general insurance services or products to Retail or Wholesale Clients. The case also highlights the importance of documenting compliance measures for both the AFS Licensee and their authorised representatives. The documents should be tailored to the business of the licensee and its authorised representatives (and not an off-the-shelf manual) and be suitable to use in staff training and development and sharing with business partners. Typical documents for small-medium sized insurance brokers, underwriting agencies and TPA’s are: Risk and Compliance Manual; and Monitoring Program Insurers and larger firms require a taxonomy of risk and compliance documents (framework) […]
The General Insurance Code Governance Committee (CGC) has called on insurers to improve transparency and communication with customers after a review of online applications for motor vehicle insurance. The review looked at how 13 insurers handle online applications across 58 motor insurance brands. Authors note: the Design & Distribution obligations (inlcuding making a TMD available) together with Australian financial services laws requirements assists in understanding why there is a large number of brands compared to a smaller number of insurers. The review found that insurers could be doing more to clearly explain to customers why they ask for certain personal details. The report noted that some insurers could not demonstrate how some questions in the applications were relevant to their decisions. The review also found that when insurers decline to offer insurance, customers are often left with vague or confusing messages that do not clearly outline the reasons or what they can do next. Executive Summary The CGC found that: Insurers often ask for personal information, such as relationship or employment status, without clearly explaining why it is needed or how it affects the outcome. When insurers decide not to offer cover online, the messages provided are frequently vague, unhelpful, or lack guidance on next steps. Some underwriting practices, such as excluding applicants based on past bankruptcy or a lack of prior insurance, may unfairly penalise otherwise low-risk customers. Most insurers are meeting their Code obligations relating to declined applications, with some demonstrating best practice by including tailored explanations and clear guidance for declined applicants. Greater transparency, fairness, and relevance in data collection and decision-making will help insurers meet their obligations under the Code and improve the customer experience. Insurers do not always explain the relevance of their questions clearly to customers The Code obligations: When an insurer is unable or unwilling to explain the relevance of a question, it breaches its commitments to transparency and fairness in the Code (Paragraph 21). This also means the CGC cannot be satisfied the insurer is meeting its obligation to only ask for and rely on relevant information (Paragraph 45). Authors Note:failure to explain the relevance of a question, may impact the insurer’s reliance on an insured’s failure to meet their duty to take reasonable care not to make a rmisrepresentation. What the CGC found: CGC reviewed the online motor insurance application forms of 13 insurers. For six of these insurers, CGC had no concerns with the relevance of the questions they asked. However, for the remaining seven, CGC identified several types of questions where the relevance to the decision to provide motor insurance was not made clear to customers. These included questions about: Relationship status Employment status and occupation Ownership of other vehicles. The CGC noted – [w]here possible, insurers should request information directly, rather than making inferences or assumptions based on indirect questions. By asking specific and direct questions, insurers treat customers more fairly, based on their individual circumstances, and are more transparent about why the information is being requested The […]
ASIC has updated its regulatory guidance on managing conflicts of interest for Australian financial services businesses. One of the general obligations of an AFS Licensee is to have in place adequate arrangements for the management of conflicts of interest that arise from the licensees financial services (or from the services provided by the authorised representative of the licensee). Section 912A(1)(aa) Corporations Act. This obligation is a civil penalty provision. Action required Licensees should review their arrangements (and those of their authorised representatives) for identifying, raising and managing conflicts of interest, against the updated RG 181, specifically update Risk & Compliance Manual and/or Conflicts of Interest Policy; update conflicts of interest training modules; and update monthly attestations. It would be timely for Licensees to reiterate Conflicts of Interests obligations with staff and ARs based on the updated RG 181 and to submit any fresh conflict of interest declarations using the Appendix to RG 181. The Appendix provides a catalogue that outlines some key legal obligations and information relevant to conflicts management that may apply to an AFS licensee, representative, or AFS licence applicant. Key updates in the revised RG 181 include: how the law applies to conflicts of interest, including the scope of the conflicts management obligation and links to other related obligations the types of conflicts AFS licensees should identify and manage the need for robust, tailored arrangements to manage conflicts practical steps for effective conflict management, and a non-exhaustive ‘catalogue’ of related legal obligations and information. Scope of the obligation The conflicts management obligation is broad and is intended to apply widely—it is not limited in its application. It applies to all conflicts of interest other than those wholly outside (i.e. completely separate to) the financial services business of you or your representative. It applies to conflicts of interest that arise within the financial services business. It also applies to conflicts that arise between something within the financial services business and something outside it, particularly where the relationship, interest or activity may affect (or reasonably appear to affect) how financial services are provided by the business. For example, an employee prioritising their competing personal or financial interest outside the business may affect how they provide financial services within the business, as well as the quality of the services they provide. What is a conflict of interest? A conflict of interest can arise where there are competing financial interests, personal interests, business or related party interests—whether direct or indirect—or competing loyalties and obligations. In some circumstances, a combination of these may give rise to a conflict. You should take a ‘common-sense’ and objective approach to determining if there is a conflict of interest. Whether there is a conflict of interest will ultimately turn on the facts and circumstances of a situation. Conflicts of interest can be: (a) actual—where a conflict currently exists that could sway your judgement or actions (or those of your representatives); and (b) potential—where circumstances do not currently give rise to an actual conflict but could reasonably […]
Key areas of focus for 2026 AFCA Claims handling Approach – consultation on AFCA’s Approach to general insurance claims handling has closed. The new Approach is expected to be released shortly. Insurers have key obligations under the Insurance Contracts Act 1984 (Cth), including the duty of utmost good faith, which requires them to handle insurance claims fairly, transparently, and efficiently. This Approach provides information about how AFCA considers various types of complaints relating to the handling of general insurance claims, against an insurer’s legal obligations and has regard to industry standards. Cash Settlements. In ASIC’s Corporate Plan 2025-26 – We will review general insurers’ use of cash settlements to better understand the practices and disclosures surrounding the offers being made and to assess whether there are risks of consumer harm. CAsh Settlements were also called out as an area of 2026 focus by the Code Governance Committee and in AFCA’s [new] Claims Handling Approach. Industry use of external experts. has highlighted improvements in how insurers oversee and engage external experts, with better measures to strengthen accountability and quality assurance. The CGC, in its Oversight of external experts: follow up 8 December 2025 has identified areas of ongoing work. Pricing promises and pricing transparency. ASIC Corporate Plan 2025-26 We will examine the accuracy and transparency of general insurers’ disclosures about premiums and work to better understand consumer experiences. Complaints (IDR). In 2024, ASIC reviewed 11 general insurers to understand how they are supporting customers who make a complaint. ASIC’s Report 802 highlighted a failure to identify 1 in 6 complaints and a lack of identifying systemic issues. ASIC has also indicated that it will be moving to publishing IDR data at a firm-level (refer CP 383). The General Insurance Code Governance Committee highlighted complaints handling as a main priority for 2025-26. The Insurance Brokers Code Compliance Committee in their Annual Report 2024-25 found 42% of brokers reported no breaches or complaints Incident and Breach Reporting. ASIC’s review of reportable situations (4th December 2024) revealed a number of poor practices among licensees including deficiencies in Licensee’s incident mangement. The Insurance Brokers Code Compliance Committee in their Annual Report 2024-25 found 42% of brokers reported no breaches or complaints Privacy changes were introduced in December 2024 with automated-decision making to be regulated by December 2026. The OAIC launched a new Notifiable Data Breaches (NDB) statistics dashboard 4 November 2025. Additional changes are contemplated to the Privacy Act. CPS 230 – operational resilience and BCPs. The new prudential standard CPS 230 introduces strict requirements for insurers to strengthen operational resilience, meaning they must effectively manage operational risks and ensure continuity of critical functions during and after a disruption event and oversee “material service providers” such as claims processing and underwriting agencies. APRA will conduct a review of the large insurers during 2026 with learnings shared for all other insurers and there material servcie providers. GI Code of Practice. The insurance Council of Australia and insurers are moving to the next stage of the development […]