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FSC ‘shares’ industry concerns over possible UCT impacts

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The Financial Services Council (FSC) says it has been working with its members to “better understand the full implications including unintended ones” from unfair contract terms (UCT) laws when they apply to insurance contracts next month.

“The FSC shares industry concerns that as a result of these legislative changes, customers who took out a life insurance policy before April 5 this year may be adversely affected in certain circumstances,” Senior Policy Manager for Life Insurance Nick Kirwan told insuranceNEWS.com.au.

Advice group Synchron has called on life insurers to provide “clarity” over how in-force policies will be handled when the UCT regime kicks in.

Director Don Trapnell says advisers want to know what insurers are planning to do about policies that lapse, change ownership, change premium structure, or need corrections.

Mr Trapnell told insuranceNEWS.com.au he has spoken to two life insurers and was given a “we’re not sure” response. He says he will reach out to other life insurers to see what their plans are for the incoming UCT regime.

But Mr Kirwan says it is for life insurers to address the matter as they see fit.

“How individual life insurance companies respond must be a matter for those companies as competition law precludes any collusion,” Mr Kirwan said.

“However, advisers can help their clients by being vigilant about correspondence from life insurance companies, for example to ensure policies don’t inadvertently lapse.”