The Australian Financial Complaints Authority (AFCA) has criticised plans to include the insurance in superannuation code as a voluntary commitment within the Life Insurance Code of Practice.

“All code subscribers should comply with relevant provisions of the code,” it says in a submission to the Financial Services Council (FSC). “It would be very confusing for consumers to have a code with some mandatory and some voluntary provisions.”

It wants competing differences between obligations in the first two chapters of the Life Insurance Code of Practice reconciled to reduce duplication and competing obligations, and to avoid confusion. The Insurance in Superannuation Voluntary Code of Practice is set to become chapter two.

The authority wants consumers to be able to enforce obligations under the life code.

It is not clear how the Code Compliance Committee will monitor and enforce provisions, AFCA says.

Either the life code should state that adherents are legally bound by its obligations, or it should be included under the Competition and Consumer Act, or seek approval from the Australian Securities and Investments Commission (ASIC) under its code of conduct regulations, AFCA says.

AFCA warns the FSC to address these issues quickly.

Law firm Maurice Blackburn criticised the insurance in super code’s lack of teeth in a submission to the Hayne royal commission last year.

Among its criticisms was that the code is not contractually binding, has no oversight or approval from ASIC, has no code administrator and is not compliant with ASIC.

AFCA suggests subscribers should be responsible for ensuring product distributors comply with the Life Insurance Code of Practice.