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Industry-run code can be change enabler, Finity says

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Actuarial consultant Finity says the updated insurance industry code of practice could be a “focal point for change” if the right approach is taken.

Consumer groups have argued the self-administered code has failed and needs stronger, government-led supervision. Choice has called for an end to what it calls “useless” codes.

They support the Hayne royal commission’s recommendation to make parts of financial services industry codes enforceable by law.

A Treasury consultation on the suggestion closed last month.

Finity Principal Raj Kanhai says the code should “remain self-regulated but mandatory for all insurers, to create a consistent outcome for consumers and a level playing field for the industry”.

He told “Rather than industry having to deal with a bunch of different regulations, we think it would work well to have the [general insurance] specific obligations all included in the code rather than in other [Australian Securities and Investments Commission] guides or elsewhere.

“Using the code as an enabler of change maximises opportunities for industry engagement and can facilitate a more ‘fit for purpose’ outcome regarding the royal commission recommendations.

“It avoids overlaying a different regime of conduct regulation on top of an existing one, allowing [the Australian Financial Complaints Authority] and the Code Governance Committee to supervise, with the Australian Securities and Investments Commission playing an escalation and enforcement role.”

Law firm Maurice Blackburn last week called for the code to be replaced “as early as possible” with legal enforcement.

The Insurance Council of Australia is reviewing the code and says it will work to ensure it “preserves the benefits of self-regulation and seeks to enhance consumer outcomes by simplifying, and not complicating, the framework within which industry codes operate.”