Sector Articles of Interest - 22 October

Written on the 21 October 2020 by SAFCA

• FCA Weekly Digest
• FCA Bushfire Financial Counselling Newsletter
• Insurance Brokers Code Compliance Committee releases Annual Review 2019-20
• AFSA Making it easier to contact
• SA Water Home Water Efficiency Check for eligible Customer Assist Program customers

FCA Weekly Digest

FCA have released its first edition of the Weekly Sector Digest to keep you all across any recent changes to the Toolkit, COVID-19 Toolkit and the National Debt Helpline website.

After some helpful feedback, we have decided we should offer an alternative to the Facebook group, as not everyone is engaged via that platform.

The Facebook group will still be active and this newsletter reflects the posts we make each week.

Contact FCA info@financialcounsellingaustralia.org.au for further information.

FCA Bushfire Financial Counselling Newsletter

FCA have released its first bushfire financial counselling newsletter connecting the people and agencies who provide Bushfire Financial Counselling throughout Australia.

Here, we can share the good work being undertaken by financial counsellors and their agencies as part of the recovery process.

Contact FCA info@financialcounsellingaustralia.org.au for further information.

Insurance Brokers Code Compliance Committee releases Annual Review of 2019-20

MEDIA RELEASE | RISING TO MEET THE CHALLENGES

A year that began with bushfires and floods before being overwhelmed by the global pandemic has set unprecedented challenges for Australian insurance brokers. These will only intensify as the new "normal" unfolds, especially given many broking firms are small businesses themselves.

"Who, in their wildest imagination, could have created a 'risk model' equivalent to this reality?" noted Michael Gill, the Chair of the Committee which oversees the Insurance Brokers Code of Practice (the Code).
The Committee released its 2019-20 Annual Review today. A copy can be downloaded here.

Mr Gill's report highlighted three key issues this year:

• Challenging times for the industry and society
• Disappointment with the Code Review
• More focus on Culture and Behaviour

Challenging times

With a raft of new laws and regulations stemming from the Financial Services Royal Commission, another bushfire season looming and economic uncertainty, Mr Gill said that the Code has never been more relevant in guiding decision-making. "Australia needs an insurance broking industry in which it can have confidence, which is able to reinstate and indemnify, which acts fairly and which is strong in every sense."

Code review

As society and the insurance industry evolve, the Code should too. The Committee's work with all Code stakeholders includes extensive consultation with consumer advocates and regulators.
The Committee was concerned by the lack of transparency and long delays in the review of the Code by the National Insurance Brokers Association (NIBA), commenced in January 2017. Mr Gill said the Committee had noticed a disturbing erosion of consumer confidence in NIBA and in the industry as a whole and that an evolving Code subject to regular review is critical to community faith in the industry. He urged NIBA "to make the completion of the review a priority, and to commit publicly to a schedule that includes adequate time for all stakeholders to comment on any new draft version of the Code".

Focus on culture and behaviour

Recognising that issues of fairness frequently stem from underlying culture rather than from laws or regulations, the Committee expanded its focus this year to include the in-depth examination of culture and behaviour. This significant shift means that as well as the robust monitoring of legal compliance, the Committee's future activities will be directed at understanding the role of culture, how Code subscribers behave and which behaviours cause the most consumer concern, how we can get more fairness, and how a "living" Code should respond to these issues.
To this end, the 2019-20 Annual Compliance Statement (ACS) included changes that helped the Committee understand institutional behaviour and to canvas information about how firms manage vulnerable clients.

Data analysis

The Annual Review reflects both the Committee's work during the year and the analysis of data collected from subscribers in the ACS. While the influx of 181 Steadfast brokers in December 2019 swelled the ranks of Code subscribers by 59%, ACS data for 2019-20 was sought only from the previous 286 subscribers.

The ACS data revealed that a total of 10,255 clients had been impacted by Code breaches, with an overall financial impact of just over $1.2 million.
The Committee remains concerned that the data hints at underlying systemic and cultural problems. Over-reporting and nil-reporting of Code breaches suggest a failure in reporting frameworks. The two main causes of breaches were identified in the ACS as 'manual error' and 'failure to follow processes and procedures', but only 1% to insufficient training. Missing the inherent contradiction in this raises questions about the effectiveness of Code competency and training frameworks.

The Committee was pleased to note a 10% increase in the number of self-reported Code breaches but concerned that almost half the subscribers continued to report nil breaches, including three of the largest firms.
There was also growth in self-reported complaints over five years with 60% self-reported in 2019 compared with 52% in 2015.

Disappointingly, complaints-handling timeframes continue to increase, even after the Committee highlighted this issue in a report published in October 2019. This is now an unacceptable trend. The new ASIC RG 271 requirement will tighten existing timeframes further, so it is critical that subscribers work to improve in this area.

More positively for clients, the number of complaints resolved in their favour increased in 2019 while the number of complaints resolved in favour of the broker dropped. In 17% of complaints, client and broker reached a mutual agreement, which could indicate a successful internal dispute resolution framework.

Further highlights from the data:

• 43% of all Code breaches related to non-compliance with client service standards for buying insurance.
• Four Code subscribers were responsible for more than two-thirds (67%) of the breaches involving scope of covered services.
• Code subscribers received 1,292 complaints that were handled via their internal dispute resolution processes an increase of 23% over the 1,049 complaints received in 2018.
• Most complaints were about small business insurance, which represented 24% of all self-reported complaints for the year, up from 21% in 2018.
• Home building insurance complaints relating to home building policies fell to 8%. This  has been one of the most complained-about products in recent years, representing, on average, around 15% of all complaints since 2016.
• Service was the most common issue of complaint, as has been the case each year since 2015.

The Committee was proud to launch its own website in July 2020. It is the central repository for all our publications and guidance resources and enables anyone to subscribe to receive updates from the Committee and to log a concern or a breach of the Code. It can be found at: www.insurancebrokerscode.com.au

Further information

Sally Davis, General Manager Code Compliance & Monitoring
On behalf of the Insurance Brokers Code Compliance Committee
T. 03 9613 7341 | Free Call 1800 931 678
E. sdavis@codecompliance.org.au

About the Insurance Brokers Code Compliance Committee

The Committee is an independent body responsible for monitoring Code subscribers' compliance with standards of good industry practice in the Insurance Brokers Code of Practice. The 467 subscribing insurance brokers have agreed to follow these standards and committed to acting fairly, ethically and reasonably when providing services to current and prospective clients. The Committee monitors adherence to the Code to help insurance brokers deliver high quality service standards to consumers.

AFSA Making it easier to contact

AFSA is committed to making it easier for people to interact with us. We are focused on delivering the right service at the right time, the right way.

From 26 October, enquiries about a bankruptcy form, creditors petition, bankruptcy notice, statement of affairs or any National Personal Insolvency Index related issue should now be made by calling our national hotline 1300 364 785 or by emailing Registry@afsa.gov.au.

Please update any Registry personnel contacts you have on file, with these details. We have prioritised the streamlining of this service to help alleviate pressures of a potential surge in applications effectively. All enquiries will be directed to the right person to answer your call or email query in a timely manner

SA Water Home Water Efficiency Check for eligible Customer Assist Program customers

Knowing where and when you use the most water around your home, will help you understand where savings can be made.

Your home water efficiency check by a licensed plumber can include:

water pressure test

• flow test of all internal taps
• installation of aqualocs, flow regulators and/or water efficient aerators
• repair of minor indoor tap leaks
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• check toilet cistern for leaks
• replace up to two showerheads with three-star rated water efficient showerheads
• advice on further water saving opportunities.

View water audit flyer