General Insurance Code Review 2024

Part 10 of the Code outlines how insurers assist individuals dealing with financial difficulties. It includes commitments regarding providing information about available support, identifying those facing financial hardship, timeframes for determining who qualifies for assistance and how insurers handle debt collection procedures. The Review Panel wants to understand the effectiveness of the existing commitments and how they might be improved. The Review’s Terms of Reference specifically notes support for customers and third-party beneficiaries in urgent financial need – for example in a catastrophe context – as an area of focus. While this issue will be further considered in Stage Two of this review – which will primarily focus on catastrophe response and issues arising from the 2022 floods – the Review Panel is also interested in stakeholders’ current views.

The Review Panel notes the expectations issued by ASIC in 2022 regarding financial hardship including that insurers should:

• offer a range of flexible support options to help consumers maintain cover, such as help to maintain premiums;
• provide specified support options regarding the payment of an excess to prevent unfair outcomes;
• more proactively communicate financial hardship information;
• monitor data on hardship requests and outcomes to inform the support options provided;
• proactively engage with consumers before the end of support; and
• avoid asking for unnecessary documentation to demonstrate financial hardship.

ASIC also published specific expectations regarding travel insurance. For example, insurers should proactively offer to cancel travel insurance policies and provide a refund of premiums where policies no longer provide material value. While these expectations were provided in the context of the COVID-19 pandemic, the Review Panel is interested in their broader applicability (without creating an expectation that insurers will provide regulated personal financial advice).

The Review Panel is also interested in whether and how the Code should distinguish support provided to those experiencing short-term financial hardship from those whose hardship is more entrenched. The Review Panel notes that the Australian Banking Association’s (ABA) Banking Code of Practice distinguishes between the support available when a recovery of the consumer’s financial position is possible and longer-term issues where restoring their financial position may be unlikely.20

The CGC has undertaken two relevant inquiries:

• November 2021 review of insurers’ implementation of vulnerability and financial hardship obligations; and
• June 2023 Inquiry into information about financial hardship support on insurers’ websites.

These reviews identified some good practices but also some weaknesses, for example noncompliance by debt collection agents authorised by insurers. Consumers have also called out concerns around the debt collection practices of residential landlord insurers, with commitments made by insurers to not pursue tenants for accidental damage under a right of subrogation. The CGC has also foreshadowed a thematic inquiry looking at end-to-end insurer processes for providing financial hardship support to consumers.

Part 9 of the Code commits insurers to take extra care with customers experiencing
vulnerability. In addition to identifying factors that might indicate vulnerability, the Code commits insurers to having internal policies and training around vulnerability and a publicly facing policy relating to family violence. The Code also makes commitments regarding the use of nterpreters.

In addition to the Code commitments, the ICA has published guidance on helping customers affected by family violence and mental health issues.

The Review Panel is interested in views about the effectiveness of the current commitments and guidance relating to vulnerability. The Review’s Terms of Reference specifically include whether the arrangements continue to meet community standards in light of new and emerging best practice approaches around extra care for customers experiencing vulnerability and the National Plan to End Violence Against Women and Children 2023-32.

For example, the International Standards Organisation (ISO) has recently published a new standard Customer Vulnerability: Requirements and guidelines for the design and delivery of inclusive service. This standard recognises that vulnerability is a human experience that many people will go through at some point in their lives. When a person experiences vulnerability it can create barriers that inhibit their capacity to engage with markets which can lead to a multitude of further negative impacts including accessibility challenges. A key focus of the standard is to promote inclusive design as a tool that organisations can use to plan for vulnerability and ensure their services reduce barriers and problems, rather than create them.

While Standards Australia is still considering whether to adopt this standard, potentially with some amendments to suit local conditions, the Review Panel is interested in stakeholder views about this conception of vulnerability in an insurance context. The Review Panel notes the recommendation from the Deloitte review, The new benchmark for catastrophe preparedness in Australia, that insurers should review the effectiveness of the definition, identification and support for vulnerable customers during catastrophes. Deloitte noted that, after a large-scale catastrophe, most customers will be, in some way, vulnerable. However, there has been inconsistency in identifying customers experiencing heightened levels of vulnerability who might require additional support.

A broad conception of vulnerability can embrace this notion of situational vulnerability, for example, in a disaster scenario. A benefit of this approach is that it should not necessarily depend upon an individual self-identifying that they are experiencing vulnerability. Building a trauma-informed claims process could be one way to respond to vulnerability.

However, there will be some customers who require prioritised assistance, even where many others are experiencing some vulnerability after a disaster. The existing Code obligation encourages the consumer to tell the insurer about their vulnerability. Recognising that the customer may not advance this information, it may be preferable for all people who have experienced traumatic situations to be regarded as vulnerable and necessitating extra help.

Such situations may include:

• impact of natural events such as storms, bushfires, cyclone and floods;
• impact of events such as terrorism;
• in respect of travel insurance – the impact of a hospitalisation, death or violent crimes affecting not just the primary victim but a travelling group;
• in respect of pet insurance – serious injury, illness or death of a pet; and
• in respect of home and contents insurance – material damage (due to fire, storms, etc) requiring the family to temporarily vacate the premises and malicious damage or property damage due to a violent, criminal act whether by a family member or another person.

The Review Panel is interested in views on how the Code might help enable earlier
identification of those that need additional help.

In addition to considering vulnerability generally, the Review Panel is interested in views about how the Code can best support the needs of persons experiencing vulnerability.

2.2.1 Women’s financial safety
The Review Panel notes the Guide to Prevention and Action on Financial Abuse within the Financial Service Sector published in October 2021. This guide includes principles that promote safety by design so that user safety and rights are at the centre of service and product development. The recent Designed to Disrupt paper published by the Centre for Women’s Economic Safety also calls for an inclusive design approach to insurance, including through improved data collection that promotes proactive intervention and tailored prevention measures and ongoing measurement of the effectiveness of interventions designed to prevent or lessen harm.

The Code already requires subscribers to publish a family violence policy on their website. The ICA also has a guide that sets out how insurers can identify and support people affected by family violence.

Some insurers have taken steps to address the suitability of insurance policies for customers experiencing family violence. For example, AAI/Suncorp updated its policies to introduce a ‘conduct of others clause’ so insurance policies cannot be weaponised by a perpetrator against a survivor of family violence. The Review Panel is interested in whether and how the Code should promote safety by design in insurance.

2.2.2 First Nations customers
The Code recognises that Aboriginal and Torres Strait Islander or First Nations customers may experience vulnerability. It also commits insurers to take a flexible approach to supporting customers’ verification and identification needs including for First Natons customers.

The Review Panel notes that the proposed ABA Banking Code of Practice includes additional commitments to First Nations customers, including the provision of appropriate accounts and services. The proposed Banking Code of Practice also commits banks to following AUSTRAC guidance on identification and verification of Aboriginal and Torres Strait Islander customers, as well as providing cultural awareness training to staff who regularly assist First Nations customers.

Research confirms that there are differing levels of awareness about the insurance products available and relevant to First Nations customers, including business customers. ASIC has also recognised the need for more culturally appropriate products and services as part of its Indigenous Financial Services Framework. The Review Panel is interested in views about whether the Code should include commitments about culturally appropriate communication or support for First Nations customers and, if so, what those commitments might be.

2.2.3 Mental health
The Code includes specific commitments to support customers who have a past or current mental health condition. These commitments relate to product design and fair treatment. The ICA has also published a Guide on Mental Health, which outlines best practices insurers should consider in meeting their Code requirements.

Insurers have obligations under anti-discrimination laws not to discriminate based on disability, including mental health. However, in recognition that insurance is a risk-based product, there is an exception which allows an insurer to treat a customer with a protected attribute differently in terms of the price of the premium, the terms of the policy, or declining the customer altogether, so long as it is based on reasonable reliance on actuarial or statistical data, or, if data is not
available, the different treatment is otherwise reasonable.

The Public Interest Advocacy Centre (PIAC) has called for the Code to contain commitments that might improve compliance with anti-discrimination laws, including that insurers:

• regularly report on the processes, procedures and policies they implement to ensure compliance;
• provide the actuarial or statistical data they rely upon should they deny coverage or only offer cover on non-standard terms due to disability; and
• regularly review the data they rely on to make decisions to discriminate and continually seek better data to enable differentiated underwriting of particular mental health conditions.

The Draft National Stigma and Discrimination Reduction Strategy has also called for more accountability and transparency around insurance decisions and data.

The Review Panel is interested in views about how the Code could promote compliance with existing laws and best practice in respect of mental health, including the recommendations of the PIAC.

2.2.4 LGBTIQA+ customers
The Code does not specifically recognise LGBTIQA+ customers. However, the Review Panel notes suggestions to update paragraph 92 of the Code to include ‘sexual orientation, gender identity and sex characteristics’ as factors relevant to vulnerability. There have also been concerns raised about discrimination against transgender and gender diverse people. The Review Panel is interested in views about whether and how the Code might respond to these concerns.

2.2.5 Customer personal insolvency
Consumer advocates have also raised concerns about insurance denials for non-disclosure of a past insolvency event (such as bankruptcy or debt agreement). Concerns include that insolvency is unrelated to the risk being insured (i.e. home, contents or motor vehicle insurance), or that customers were not aware that debt agreements are a form of personal insolvency at the time the disclosure was sought by the insurer. The Review Panel is interested in views about whether and how the Code might respond to these concerns, and whether there are other questions insurers ask at the point of sale or renewal which may create or exacerbate vulnerabilities. The Review Panel also seeks feedback on whether this issue is best dealt with outside the Code.

The Code applies differently to retail and wholesale insurance (see paragraph 12). Parts 5, 6, 7, 8, 9 and 11 of the Code do not apply to wholesale insurance.

The Code generally adopts the Corporations Act definition of retail insurance and this may result in certain types of commercial policies for small business being defined as wholesale insurance.

In respect of general insurance disputes, it is noted that AFCA defines a small business as an organisation with less than 100 employees.

In addition, the Code does not distinguish between the commitments of insurers in respect of consumers dealing directly with the insurer and those consumers who have an insurance broker or intermediary acting on their behalf. The Review Panel notes that some insurance brokers are bound by the National Insurance Brokers Association of Australia (NIBA) Insurance Brokers Code of Practice and where other codes apply to services being performed by insurance brokers, the broker will comply with the higher of the Code standards that apply in performing those specific services.

The primary obligation of the Code is set out in paragraph 21 and commits subscribers (including distributors and service suppliers) to be honest, efficient, fair, transparent and timely. Paragraph 22 sets out how insurers will meet this obligation to consumers and largely reflects (but does not use exactly the same language) as the general obligation in financial services law to provide services ‘efficiently, honestly and fairly’. There may be benefit in the Code further articulating what this standard means in the context of general insurance.

The Review Panel considers the primary obligation is a vital over-arching commitment of the Code and its subscribers and is interested in feedback on how the provisions are working in practice and whether any change is needed.

Part 4 applies to retail and wholesale insurance products and focuses upon the conduct, education and training of Code subscriber employees and distributors. In addition, the Code provides mechanisms and remedies for dealing with concerns about those employees and distributors. Part 4 also provides a mechanism for raising concerns about a person or organisation selling the subscriber’s products who is not a distributor.

Employees and distributors are defined in Part 16 of the Code. An employee is defined as a person employed either by the Code subscriber or a related entity that provides services to which the Code applies. The definition of distributors is linked to the distribution of financial services by an Australian Financial Services Licensee in accordance with the Corporations Act or when operating under a binder with the Code subscriber.

Some stakeholders noted that consumers do not always understand the role of brokers and underwriting agents, and on whose behalf they are acting. Further, some concerns were noted about the adequacy of oversight by insurers of distributors. There may be opportunities to include additional clarification or guidance in the Code, to improve understanding and accountability, including clarifying the roles of different types of distributors (such underwriting agents) and on whose behalf they are acting.

3.2.1 Training
The Code requires employees, distributors and service suppliers to be trained and
competent. Financial services laws require that representatives are adequately trained and are competent to provide the relevant financial services. Other than when providing financial product advice, the Code and laws are non-prescriptive on the nature, amount and type of training required. Some stakeholders have indicated that there would be merit in strengthening or elaborating the Code in relation to the nature and amount of training provided by insurers. This would help ensure employees, distributors and service suppliers are wellplaced to provide appropriate support and protection for consumers.

Part 5 applies to retail insurance products only and focuses upon the conduct, monitoring and supervision of Code subscriber service suppliers. In addition, the Code provides mechanisms and remedies for dealing with concerns about those suppliers.

Service suppliers are defined in Part 16 of the Code and the definition is restricted to:

• an Investigator;
• Loss Assessor or Loss Adjuster;
• Collection Agent; or
• a person, company or entity who is contracted by the Code subscriber to manage a claim on their behalf, including insurance brokers with delegated claims authority.

There may be an opportunity for the Code to be more explicit about the standards expected for service suppliers, or some classes thereof. For example, clearer standards about the content and understandability of expert reports may be helpful. In terms of oversight of service suppliers, the Code could articulate the role of insurers in coordinating certain parties, such as assessors and repairers.

Part 6 applies to retail insurance products and makes a range of commitments relating to buying insurance, including use of plain language communication, avoiding pressure selling and the application and renewal processes. There are also specific obligations regarding automatic renewals, sum-insured calculators for home building policies (paragraph 48), displaying the prior year premium on renewals (paragraph 50) and no claims discounts (paragraph 51).

This Part of the Code also includes paragraphs that may be affected by recent law reform, including the new Design and Distribution Obligation (paragraph 43), the deferred sales model for add-on insurance (paragraphs 52-54) and the anti-hawking provision (paragraph 44). The Review Panel is interested in feedback on the interaction of the Code with these reforms.

Part 7 of the Code applies to retail insurance products and makes commitments relating to cancelling an insurance policy. First, where policies allow for cancellation and the obtaining of a refund, subscribers commit to returning the refund within 15 days (this might not apply to insurance arranged through a broker). Second, paragraphs 56 and 57 commit subscribers to provide notification upon non-payment before cancelling the policy in situations where policy premiums are payable by instalment.

The Review Panel’s Terms of Reference ask it to consider the proposed phasing out of cheques by 2030. This may affect Code commitments relating to cancellation of insurance policies and the provision of refunds. The Review Panel welcomes suggestions on how the Code should respond to the proposed phasing out of cheques.

Part 8 of the Code outlines the commitments of insurers in relation to claims handling and Part 15 addresses claims investigations. These provisions were developed before the implementation of the key recommendations of the FSRC and in particular the inclusion of claims handling as a financial service.

Claims handling comprises a significant portion of general insurance complaints to AFCA (over 65% in 2022-3) and has been a key area of focus in submissions and evidence to the Flood Inquiry. ASIC has set out its expectations in relation to claims handling in a range of reports and industry communications, including INFO SHEET 253. The Deloitte review noted record levels of breaches of the Code communication timelines in relation to the 2022 flood events. Claims handling has also been a focus of the CGC, including a thematic report published in July 2023.

Common issues raised include communication about the progress of claims, the use of external experts and expert reports, and cash settlements. Part 8 includes provisions relating to the appointment of external experts and a timeframe for providing a report, however the Code does not contain requirements for the content of the report.

The Review Panel is interested in feedback on enhancements to the Code that help insurers meet the reasonable expectations of consumers throughout the claims process.

3.5.1 Cash settlements
Paragraph 79 of the Code requires information to be provided if a cash settlement is offered under a home building policy, to help the customer understand how cash settlements work and how decisions are made on cash settlements. We note that the ICA has issued an information sheet to support paragraph 79 that gives common reasons for when a cash settlement should be considered.

The Corporations Act governs the requirement to provide a Cash Settlement Fact Sheet to retail clients in certain circumstances.

The Review Panel recognises that payment of a cash settlement may be the most appropriate way to settle an insurance claim in certain circumstances. However, there may be risks associated with cash settlements, such as the transfer of project management risk from the insurer to the insured and the escalation in cost of repairs, which has been discussed at the Flood Inquiry. The Review Panel is interested in whether and how the Code could be enhanced to improve understanding and better protect customers where cash settlements are used.

3.5.2 Expert reports
Like cash settlements, expert reports have been subject to discussion at the Flood Inquiry and in other contexts. The Code currently requires that the expert has relevant expertise and that experts’ reports are delivered within a certain timeframe after appointment.

Issues raised around expert reports include readability and accessibility, failure to identify causation, the level of detail or lack thereof and the cost for the insured to obtain reports that challenge the insurer’s report. Similar issues arise in relation to building Scope of Works. The Deloitte review56 identified policy design as a key area for improvement, for example where a design feature required expert assessments (such as hydrologists for flood exclusions) and the experts were in short supply.

3.5.3 Timeframes
Part 8 of the Code prescribes timeframes for assessing a claim (paragraphs 68-71) and claim decisions (paragraphs 76-77).

The Code can apply different timeframes or changes to timeframes for several reasons. For example, in the event of an Extraordinary Catastrophe (paragraph 78(a)) or due to the complex nature of the claim (paragraphs 83-85).

The Review Panel wants to understand the impact on consumers where variations to Code timeframes are applied and whether any changes to the Code should be considered.

Part 11 applies to retail insurance products and also extends to uninsured persons making a claim against a customer insured by a subscriber under a retail insurance policy.

Subscribers commit to providing readily available information about complaints processes, acknowledging complaints, handling complaints with appropriate expertise and independence from claims handling staff and keeping customers informed about the progress of complaints at least every 10 days (unless an alternate timeframe is agreed).

Subscribers also make several commitments relating to decisions on complaints, including that the decision rationale is provided and that complaints are resolved within 30 days. If this timeframe is not met, the subscriber will explain why and provide information about the right to take complaints to AFCA.

Paragraph 141 of the Code commits subscribers to comply with the ASIC guidelines. Since the current version of the Code came into force, ASIC has updated its regulatory guide, including making some standards and requirements relating to dispute resolution enforceable. At this time, the ICA updated the Code, to align the definition of complaints and timeframes for responding to a complaint with ASIC’s regulatory guide.

It would be helpful to understand how the Code can help insurers meet or exceed ASIC complaints requirements. For example, there may be an opportunity for insurers to more proactively help vulnerable consumers access complaints processes. The Code could also be enhanced to include commitments by insurers to use available complaints data to drive performance and improve consumer outcomes.

The cost of insurance has risen dramatically, with the Australian Bureau of Statistics reporting that insurance prices rose 16.2 percent in the 12 months to the end of December 2023. This is the largest annual rise since March 2001.

Codes of Practice do not generally address prices. However, given affordability is such a significant community concern, the Review Panel is interested in what, if anything, the Code might do to improve the affordability of premiums, recognising that other mechanisms may be more appropriate for this purpose.

For example, the Review Panel is aware of concerns that some insurers charge higher amounts where premiums are paid by instalments rather than annually. There are also calls for insurance premiums to be payable via Centrepay. The Review Panel is interested in how insurers address these concerns, particularly in a more digital/tech-enabled environment.

Similarly, the Review Panel is aware of concerns about the premium differentials between new and renewing customers. In 2018, the Association of British Insurers launched a set of guiding principles and action points to address excessive differences between new customer premiums and renewal premiums that unfairly penalise long-standing customers. Subsequently, the UK Financial Conduct Authority enacted new rules so that renewal quotes for home and motor insurance consumers are not more expensive than those for new customers.

In 2023, ASIC issued a report identifying a range of ‘pricing failures’ primarily related to insurers’ internal systems and processes and recommended improvements required to fix them. The report confirms the standards general insurers need to meet in designing and promoting pricing promises to ensure consumers get the full benefit of any discounts promised. The Code includes a commitment to explain how ‘no claims discounts’ work, and the Review Panel is interested in how effectively this provision promotes clear pricing promises by insurers.

The Review Panel is also very interested in whether the Code could assist consumers with insurance affordability and if so, how. This could include, for example, commitments in relation to insurer communication to consumers in relation to the material components that comprise or affect the insurance premium and options that may be available to the consumer, such as alternative products and/or policy terms, that may offer lower premiums.

A number of Australian insurers have developed programs that incentivise consumers to improve the structural resilience of their homes in exchange for premium discounts. For example numerous major insurers operating in Northern Queensland provide consumers with premium reductions for cyclone retrofitting and/or elevating homes at risk of flood. The insurance industry more broadly has indicated that consumers’ risk mitigation activities can be considered by insurers when setting a premium and that some insurers ‘may offer discounts at an individual level’. In property insurance, for example, taking certifiable measures to make your home more resilient, such as strengthening doors and sealing windows, elevating floors and using improved materials can reduce risks associated with cyclones, flood or bushfires.

The National Emergency Management Agency (NEMA), through the Hazard Insurance Partnership (HIP), is leading the development of a national mitigation measure knowledge base that will help households understand the actions they can take to reduce risk. To complement this work, insurers have been working with the Resilient Building Council on the development of a bushfire resilience app and some insurers have recently committed to offering premium discounts to home policyholders who use the app, supported by NEMA, to improve their bushfire risk. Households that complete the Bushfire Resilience Rating Home Assessment
and certifiably strengthen their properties’ defences will be given discounted premiums by participating insurers. The ICA and insurers are also currently involved in the development of the multi-hazard version of this tool, which includes bushfire, flood, cyclone and energy efficiency. Taken together, these approaches could provide a more coordinated scheme that ensures risk mitigation measures are responded to transparently by insurers when communicating and setting premiums.

Similar types of mechanisms have been suggested by consumer groups, by the NSW Bushfire Royal Commission, the Royal Commission into National Natural Disaster Arrangements and the ACCC. The ACCC, in its inquiry into Northern Australian Insurance, found that individual risk mitigation efforts are not always recognised by insurers. It called for insurers’ quotes and renewal notices to:

• display what, if any, discounts have been applied to reflect mitigation measures undertaken on that property; and
• include a schedule of mitigation measures customers in similar properties have undertaken to improve their risk rating and a guide to the premium reduction – if any – that ensued.

The Review Panel is interested in whether a new Code commitment should be introduced to require insurers to consider relevant individual-level mitigation measures for any new or renewing insurance policy, and to demonstrate how those measures have been reflected in the proposed premium. The Review Panel is also interested in feedback on other ways the Code could address this issue, for example through insurers assisting consumers to better understand the impact of risk mitigation on their insurance premiums.

The Code sets out the standards that general insurers commit to meeting when providing services to their customers. It is used by insurers, consumers and other stakeholders and includes a mix of high-level principles or commitments and more detailed sections intended to assist insurers in meeting those commitments.

The Review Panel is seeking views on whether the structure and level of content of the Code should be revised to better meet the potentially differing needs of insurers and consumers. This might, for example, see the Code developed into a more detailed ‘how to’ guide for insurers that outlines better practice in more detail (similar to Part 15 on Claims investigation standards). If this were the case, a shorter and more accessible document may be needed for consumers. The Review Panel notes that in the proposed Banking Code of Practice that is currently being considered for approval by ASIC, the ABA is suggesting that the revised code be accompanied by a new customer-facing document or Customer Guide.

Part 13 is an important Part of the Code providing mechanisms for breach reporting and the imposition of sanctions. Part 13 also sets out the role of the CGC and compliance arrangements for Code subscribers.

The CGC is an independent body that monitors and enforces insurers’ compliance with the Code. It does this by undertaking thematic reviews and other activities to assess how well Code subscribers are complying with the Code’s standards, highlighting both best practice and emerging risks and guiding insurers on how to lift compliance and improve service.

In addition, there is a Code Governance Committee Association which is responsible for appointing the members of the CGC and establishing its charter and budget.

This governance structure and how it operates in practice may not be well understood by some stakeholders and the structure differs from the approach in other industries and jurisdictions. Some stakeholders have suggested that improvements to the governance arrangements for the Code could better support the CGC in promoting Code compliance.

Further, to effectively fulfil its role, it is important that the CGC is adequately resourced, independent and wields adequate powers and sanctions.

It is important the Code not only sets out standards of conduct and behaviour that meets community needs, standards and expectations but that it can impose effective penalties and deterrence mechanisms when standards are not met. Recognising that it is not long since some of the sanctions were introduced to the 2020 Code, the Review Panel is interested in suggestions for compliance activities that could better promote compliance. This may include, for example, allowing the Code Governance Committee to ‘name’ insurers in its annual reports on breaches and reports on own-motion investigations.

The Code requirement to report significant breaches of the Code to the CGC is in addition to the requirement on AFS Licensees to report ’reportable situations’ to ASIC. The Review Panel is interested to understand any duplication or inefficiencies this may create. The Review Panel notes it is important to balance efforts to remove such duplications against the need for the CGC to effectively perform their Code role of monitoring and enforcement.

The Review Panel is also interested in stakeholder perspectives on Code governance and compliance and how it could be enhanced to effectively facilitate compliance with Code commitments. For example, the Review Panel notes that some other industry code commitments are incorporated into the contract with the consumer and contribute to enforceability by the consumer. Other industries and jurisdictions provide for periodic reviews of the performance and effectiveness of their Code oversight body. The Review Panel is interested in whether a mechanism for periodic reviews of the performance of the CGC would be of value and, if so, how it could be optimally implemented. 

The ICA has indicated its intention to submit the version of the Code developed through this Review to ASIC. The Terms of Reference for the review include identifying possible Code commitments that might be advanced for designation as Enforceable Code Provisions (ECPs) as part of that application.

ASIC Regulatory Guide 183 Approval of financial services sector codes of conduct (RG 183) sets out ASIC’s expectations when considering a Code for approval. RG 183 has not been updated since the FSRC reforms introduced new powers for ASIC to approve a Code with designated Code commitments as an ECP. However there are legislative criteria for determining an ECP.

A Code commitment that is an ECP would have elevated status as it would become financial services law and therefore be enforced by ASIC (and not the CGC). A Code commitment would not meet the legislative criteria for commitments capable of ECP designation if it:

1. is broad, in-principle, or an aspirational commitment;
2. restates the law or mirrors a legal requirement;
3. would not cause significant and direct detriment to a person if the commitment is not met; and
4. is not a commitment by a general insurer to a person relating to transactions or dealings.

Consistent with point 2 above, the Code commitment would need to go above the law or elaborate on the law. It would also need to be drafted with sufficient particularity to be enable enforcement by ASIC.

The Review Panel notes that ASIC is currently consulting on a proposed Banking Code of Practice that was submitted by the ABA for approval. This did not include any Code commitments designated as an ECP. The Review Panel will consider the submissions and outcomes of this consultation in its consideration of possible Code commitments that might be advanced for designation as ECPs.

The Review Panel is interested in stakeholders’ views on the areas of the Code that could be considered for designation as ECPs and any changes to the current Code that would facilitate that.