ASIC says it has only received 15 applications for insurance claims handling and settling licences, with some so sloppy they will have to be resubmitted.
The regulator has issued a reminder that, as per recent reforms, insurance claims handling and settling is now a service which requires an Australian financial services licence.
Licences have been required since the start of 2021, but firms have until May 7 at the very latest to get their applications in. That is the latest date that ASIC can process applications to meet the June 30 legislative deadline.
"Time is running out for firms to lodge their applications with ASIC. To date we've received fewer than 15 applications for the new claims handling and settling service. Some applications received have also needed to be re-submitted because of their poor quality," ASIC deputy chair Karen Chester said.
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"We are concerned that firms are running the risk of not submitting a complete application in time to get the benefit of the legislated transition period. Firms need to submit an application no later than 7 May 2021. Failing to do so poses a real risk that these firms will have to stop providing claims handling and settling services after 30 June 2021."
The requirement for those involved with insurance claims handling to be covered by an AFSL is one of the reforms to come out of the Royal Commission.
Claims handling and settling services were previously excluded from the definition of 'financial service' in the Corporations Act 2001 and persons who provided these services were not required to hold an AFSL or be an authorised representative. This exclusion has now been removed.
Treasury is still consulting on regulation of insurance claimant intermediaries, so further reforms could be on the cards.