The Financial Services Council (FSC) says an independent body will oversee the life insurance code of conduct – with the move attracting qualified support from industry superannuation funds.

In a submission to the Senate Economics References Committee’s scrutiny of advice inquiry, the FSC says the code “will have a robust independent governance framework”.

Compliance will monitored by a committee independent of the FSC.

“This is the process other financial services such as the banking and general insurance industries use successfully with their respective codes to ensure effective and transparent compliance,” the FSC submission says.

“Where the independent committee determines that an insurer has not adequately carried out corrective action where a breach is identified, it is envisaged that the committee can impose sanctions.”

The breach would be reported to the FSC board, to carry out disciplinary action.

“The objectives of the code are to commit insurers to high standards of customer service and to improve trust and confidence in the industry,” the submission says. “The code will be built upon the fundamental principles of honesty, transparency, fairness and timeliness.”

It will be subject to independent reviews, to ensure continued relevance.

The Australian Institute of Superannuation Trustees (AIST) says the code should be based on the General Insurance Code of Practice.

“The AIST supports clear and transparent guidance and disclosure for consumers and providers of life insurance, and has considered there to be a need for a code,” its submission to the inquiry say.

“We also believe the General Insurance Code of Practice, recently developed by the Insurance Council of Australia, provides a document that would be a good starting position when developing a code.”

The association supports setting up an independent committee to oversee the code, but also wants a role for super trustees.

“A principles-based code, written in plain English with timeframes set and supported by all parties to the code, would provide enormous benefit to all involved in life insurance claims, whether inside or outside of super.

“We also consider that there needs to be a greater focus on the role of trustees in a code of conduct.”

The association has suggested how the code should be developed – but its proposal is in conflict with the FSC’s bid to have the code in place by July 1.

“We recommend that the development of such a code involve user-testing and feedback from consumers, advisers and other consumer-facing financial services professionals, as well as super trustees and the life insurance industry itself,” the AIST says.