Financial Services Council CEO Sally Loane says the next version of the life insurance code of practice will take a stronger stance on poor sales practices highlighted at the Hayne royal commission.

Reviews by the Australian Securities and Investments Commission (ASIC) have also found pressure selling tactics and high cancellation rates have continued since the first code took effect in the middle of last year.

“The first iteration does go into detail on direct sales, but we have a lot more to say in the second iteration of the code,” she told the royal commission.

Ms Loane, who came under criticism from media at the weekend for a perceived lack of knowledge of code details, says the next version will also apply to distributors such as Freedom Insurance Group, but was unable to tell the royal commission if the FSC will support restricting outbound phone calls to direct-sale life products.

“I would like to just reflect on that,” she said. “We will certainly take all of the evidence that has come before this royal commission and what our members tell us about those particular products into consideration.”

Ms Loane says the FSC continues to support the claims handling carve-out from the financial services definition, meaning it is not subject to Corporations Act obligations to act efficiently, honestly and fairly.

Changing the definition so claims assessors have the same obligations as financial advisers may be taking “a sledgehammer to crack a nut”, while the FSC is also monitoring the industry response to the code and awaiting an Australian Prudential Regulation Authority report that is due next year, she said.

“What we say about claims assessors is that we are giving a great deal more granularity around commitments to service, training, etc, in the code. We would like to see the code play out,” she said.

The FSC is looking at submitting the next version of the code to ASIC for approval, but is yet to make a firm decision. No sanctions under the code have been applied in its first year of operation.

Ms Loane described the sales practices of ClearView and Freedom as “very poor and very disappointing” when asked by Senior Counsel Assisting Rowena Orr.

“The effect on the consumers was clearly highly detrimental and to be absolutely regretted.”