Treasury has revised draft product design and distribution legislation, proposing measures that could allow the Australian Securities and Investments Commission (ASIC) to intervene on funeral insurance.

Insurers and brokers argued the first draft of the legislation was unsuited to the industry and could lead to increased compliance risks and higher premiums.

The Insurance Council of Australia (ICA) says it appreciates the Government’s willingness to reconsider the draft legislation.

Spokesman Campbell Fuller says the second round of consultation will allow ICA to ensure concerns with the first draft have been addressed.

The National Insurance Brokers Association is examining the revised document after earlier raising doubts about how the proposed arrangements would work in practice.

The Consumer Action Law Centre says the new draft opens the door for ASIC’s product intervention powers to be extended by regulation to new areas.

CEO Gerard Brody says the Government is considering using the regulation-making power to cover funeral expenses insurance and other “junk insurance” including extended warranties.

“Until now, we’ve had to wait until people were hurt by exploitative businesses before ASIC could act,” he said. “The [Hayne] royal commission has shown we need a regulator with bigger teeth.”

Submissions on the revised draft are due by August 15.