The Australian Financial Complaints Authority (AFCA) should report insurers to the regulator if they engage in unconscionable conduct to sell cover that is not needed or could not be claimed on, a guidance note for the new scheme says.

The Australian Securities and Investments Commission (ASIC) cites mis-selling as an example of contraventions that should be reported by AFCA, which will begin handling financial services complaints in November.

“We expect that if the conduct suggests ongoing harm or a continuing risk of consumer losses, AFCA will report as soon as practicable on becoming aware that a serious contravention has occurred or may have occurred,” the regulator says.

“This means AFCA should not necessarily wait until a complaint has been finalised before reporting.”

The new RG 267 guide sets out ASIC’s oversight role and the obligations on financial businesses, which are required to become AFCA members by September 21.

ASIC says it has released guidance ahead of AFCA’s start to provide policy certainty for stakeholders and to smooth the transition to the new arrangement, which brings together three previously separate complaints handling schemes.