The financial regulator says companies arranging group insurance cover may not be required to hold a financial services licence.

At present all companies arranging group insurance – known as group purchasing bodies – must hold an Australian financial services licence (AFSL). However, in a clarification issued last week the Australian Securities and Investments Commission (ASIC) concedes the rules will be overly burdensome for some.

ASIC has relented on certain group purchases, and now says a company is likely to avoid an AFSL requirement if the purchasing of group insurance is “occasional” and “less significant”.

If purchasing group insurance is outside a company’s “core part” and does not make a profit, it may also qualify the company for a waiver.

But ASIC says any group that purchases insurance products under a “systematic or continuous or repetitious” arrangement and is making a profit from that activity is still required to be licensed.