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Thursday, 23 September 1999
Page: 10343


Mr HOCKEY (Financial Services and Regulation) (9:57 AM) —I move:

That the bill be now read a second time.

The Choice of Superannuation Funds (Consumer Protection) Bill 1999 is being introduced today. This bill will achieve a number of objectives—objectives which are fundamental to enhancing Australian business and at the same time ensuring consumer protection and promoting my previously stated goal of empowering consumers to develop, recognise and exercise their consumer sovereignty.

This bill will strengthen consumer protection in the life insurance industry, enhance the accountability of life companies and brokers, and promote regulatory neutrality by bringing the regulation of life insurance advisers into line with that of securities dealers and their representatives.

In addition, the measures proposed in this bill will promote consumers' ability to assess a range of products and exercise choice as to which products best meet their needs.

In addition to promoting consumer protection and promoting consumer sovereignty, this bill will specifically support the government's choice of superannuation fund legislation. This shows our commitment to having in place an appropriate compliance regime to complement the choice of fund initiatives.

The measures will also complement existing prudential requirements under the Life Insurance Act 1995, thereby bringing to fruition a process of reforms intended to achieve a modern, flexible and strong regulatory framework for life insurance.

This bill contains measures which promote the transparency of information and require life companies, brokers and advisers to give consumers information that allows them to assess the features of both the product being offered and the services being provided.

These measures will bring the regulation of life insurance advisers into line with the current provisions of the Corporations Law applying to securities advisers, and more generally with proposals contained in the government's Corporate Law Economic Reform Program, CLERP 6 in particular.

Accountability of participants in the industry is also addressed in this bill. Life companies will be required to set up an internal compliance committee. This committee will be responsible for dealing with consumer related issues and ensuring that a proper system of management controls are in place to ensure compliance with this bill.

This bill provides scope for the current Life Insurance Code of Practice to be given statu tory backing and introduces a range of civil and criminal sanctions.

The measures in this bill are broadly consistent with reforms proposed as part of the Corporate Law Economic Reform Program.

In conclusion, the reforms contained in the Choice of Superannuation Funds (Consumer Protection) Bill will raise industry standards of service and advice. I might take this opportunity to thank all those organisations that participated in the extensive consultations which led to the formation and redrafting of this bill after it was originally introduced as the old Life Insurance Conduct and Disclosure Bill. The consultations were very informative and very constructive, with the result that the reforms will give consumers greater confidence when choosing life insurance products and help them choose among a range of products.

Finally, this bill is designed to support and encourage this very successful and thriving industry.

I present the explanatory memorandum to the House.

Debate (on motion by Mr Melham) adjourned.