Mr MILES (9:51 AM) —I move:

That the bill be now read a second time.

The Life Insurance (Conduct and Disclosure) Bill 1998 is being introduced today to give effect to a range of measures announced by the government in October 1996 to strengthen consumer protection in the life insurance industry.

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

The key policy objectives of the Life Insurance (Conduct and Disclosure) Bill 1998 are to strengthen consumer protection in the life insurance industry; enhance the accountability of life companies and life brokers in respect of product distribution; and improve consistency in the regulatory treatment of life insurance advisers and securities dealers and their representatives.

The bill will promote consumer protection and regulatory neutrality by introducing provisions comparable to the Corporations Law in relation to product disclosure, financial advice recommendations and prohibitions on misleading and deceptive conduct.

Accountability will be promoted by requiring life companies to establish an internal compliance committee to monitor compliance with the consumer protection regime, enabling the Life Insurance Code of Practice to be given statutory backing and introducing a balanced range of civil penalties and criminal sanctions.

The Life Insurance (Conduct and Disclosure) Bill 1998 will be administered by the government's new market integrity and consumer protection regulator for the financial system, the Australian Securities and Investments Commission. This legislation will play an important role in strengthening consumer protection in the life insurance sector in the lead-up to choice of superannuation fund for new employees from 1 July 1999.

Introduction of the Life Insurance (Conduct and Disclosure) Bill 1998 will not hinder progress toward a single licensing regime for financial advisers foreshadowed under the government's corporate law economic reform program (CLERP). The measures in the bill are broadly consistent with CLERP proposals. However, there may be some adjustment to the life insurance regime contemplated in this bill when CLERP reforms are eventually introduced.

In conclusion, the reforms set out in the Life Insurance (Conduct and Disclosure) Bill 1998 will raise industry standards of service and advice, and thereby give consumers greater confidence when considering life insurance products as protection against adversity and investment for the future. The consumer protection reforms will also meet community expectations for a more open and consumer-oriented industry.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr O'Connor) adjourned.