The Treasurer has announced the Government’s decision on limited class exemptions to the deferred sales model for add on insurance as well as the products that will not be covered by the anti-hawking regime. Background.
UPDATE: Draft Regulations
Both of these reforms were included in the Financial Sector Reform (Hayne Royal Commission Response) Act 2020 and commence on 5 October 2021.
Deferred sales exemption
The Government will exempt from the deferred sales model the following classes of insurance products:
- compulsory third party (CTP) insurance for motor vehicles;
- third party property damage, fire and theft insurance for motor vehicles;
- comprehensive insurance for boats, motorcycles, motorhomes, caravans, and trucks;
- insurance sold within superannuation (including group life insurance);
- postage and delivery of consumer goods insurance;
- home building insurance; home and contents insurance; and
- landlord insurance.
Relief will also be provided for wholesale style insurances available to businesses.
The Government previously announced its intention to use the regulations to exempt add‑on travel insurance products.
But the insurance products will not be exempt from the anti-hawking laws which also start on 5 October 2021.
Basic banking products will be exempt from the anti‑hawking regime, where the customer initiates the contact. This includes contact about products such as transaction accounts, stored value cards, electronic cash, direct debit services and electronic payment services.
The anti-hawking changes prohibit the hawking of superannuation products as well as the hawking of insurance products.
It also contains a new general prohibition of offers to sell or issue financial products which are made in the course of, or because of, unsolicited contact. The general prohibition will apply to all kinds of financial products, including securities and interests in managed investment schemes, except in certain circumstances.
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Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.