The new life insurance code of conduct will not be approved by the Australian Securities and Investments Commission (ASIC), despite some Financial Services Council (FSC) members requesting the step.

In a submission to the Senate Economics Legislation Committee, ClearView MD Simon Swanson attacks the way the matter has been handled by the FSC code working group. 

He says a draft code was released by the FSC on December 23 for member consultation, with submissions due by the end of January.

“No issues paper was ever considered, drafted or published,” Mr Swanson says in his submission. “The essential task of assessing the principles as the basis and framework of the code was ignored, despite senior advice to the FSC to do so.”

“To put a newly proposed code to consultation while the country was on its summer break meant very little formal feedback was received.”

He believes only a “handful” of submissions were received.

There have since been various drafts of the code, but only working group members have been given three days to review each version.

Mr Swanson says the general insurance code consultation took a year, and that was only for an updated version of an earlier code.

“There has been strong resistance on the FSC working group to increase standards or change current practices,” he said.

“The current draft of the code that is being considered by the FSC life board merely codifies the unethical, unprofessional and in some cases illegal practices of insurers.”

As such, the code would not be approved by ASIC if submitted in its current form, Mr Swanson claims.

Other problem areas in the proposed code include advertising, financial hardship and vulnerable customers, he says.

“The current draft of the code mis-states a number of current legal requirements in particular key provisions regarding when an insurer can cancel a policy and the duty of disclosure requirements,” Mr Swanson says.

“There are a number of obligations placed on customers in the draft code. We understand the purpose of a code is to place obligations on insurers rather than customers.”

ClearView confirmed to insuranceNEWS.com.au it is a member of a number of FSC life working groups.

An FSC spokesman told insuranceNEWS.com.au the code has been sent to a number of stakeholders in the life industry, although no version has been publically released.

“We have been consulting with stakeholders and it has been a transparent process. The code is a work in progress and there will be a preview at the [FSC] life conference this week.”