The Association of Financial Advisers (AFA) has sent an advisory to members explaining how the new claims handling regime will apply to them.

AFA says it made a submission to a Treasury consultation, identifying a number of issues and seeking a range of changes in the draft regulation for new laws which require an Australian Financial Services licence for those providing claims handling and settling services.

“At that time, there was some concern expressed about whether financial advisers needed to vary their licence to include an authorisation for claims handling,” AFA said.

“We are pleased to announce that the Government has released a regulation that will provide an exemption for financial advisers from the need to vary their [licence] in order to provide claims handling.

“This regulation provides an exemption for individually licensed advisers and authorised representatives.  It appears to meet the needs of the small business financial adviser population.”

The claims handling explanatory statement says intermediaries and third-party entities who derive a monetary benefit from acting for the consumer to handle insurance claims are required to have a licence.

Since the start of the year, claims handling and settling is a financial service that requires a licence by January 1 next year. There are exemptions in certain circumstances.

Click here for the regulation and here for the explanatory statement.