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Taxation Laws Amendment Bill (No. 4) 2002

Part 4 Conduct of life brokers and their life insurance advisers

   

34   Effect of Part

                   This Part contains provisions governing the conduct of life brokers and their life insurance advisers in relation to the giving of certain insurance services, including in particular the giving of life insurance advice.

35   Application of Part

                   This Part does not apply in relation to anything done by a life broker if it is done in the course of acting as an agent or sub-agent of a life company.

36   Definitions

                   In this Part:

exempt person means a person included in a class of persons declared by the regulations to be exempt from this Part.

life insurance adviser , in relation to a life broker, means:

                     (a)  a natural person (other than an exempt person) who is an agent or sub-agent of the life broker, whether or not the person is authorised to give life insurance advice by or under the terms of his or her agency agreement; or

                     (b)  a natural person (other than an exempt person) who is an employee of the life broker, whether or not the person is authorised to give life insurance advice by or under the terms of his or her employment; or

                     (c)  any other natural person (other than an exempt person) who is authorised to give life insurance advice by the life broker, or by or under the terms of his or her employment by an agent or sub-agent of the life broker, or who gives such advice while ostensibly acting within the scope of such an authorisation.

37   Disclosure statements

             (1)  A life broker, or a life insurance adviser of a life broker, who offers, or is asked to give, a person (the client ) an insurance service in relation to a life policy or life policies must, as soon as practicable after the broker’s or adviser’s first contact with the client, give or send to the client a written disclosure statement containing the prescribed particulars.

             (2)  Subsection (1) does not apply in relation to a client who has previously received a disclosure statement from the broker or the adviser, as the case may be, unless the particulars set out in that disclosure statement are no longer accurate or complete.

             (3)  A person is guilty of an offence punishable, on conviction, by a fine not exceeding 200 penalty units if:

                     (a)  the person fails to do an act; and

                     (b)  failing to do the act results in a contravention of subsection (1).

Note:          Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

             (4)  In this section:

insurance service , in relation to a life policy or life policies, means any service or advice about, or connected with, the policy or policies (including life insurance advice within the meaning of this Act), but does not include any service or advice of a kind declared by the regulations to be a service or advice to which this section does not apply.

38   Life insurance advice must contain certain information

             (1)  A life broker, or a life insurance adviser of a life broker, who gives life insurance advice to a person who may reasonably be expected to rely on it must ensure that the advice meets the requirements of this section.

             (2)  An advice must be in writing.

             (3)  The document containing the advice must also set out:

                     (a)  the name and business address of the life broker or life insurance adviser; and

                     (b)  if the advice is given by a life insurance adviser of a life broker—such other particulars as are prescribed; and

                     (c)  the basis on which the advice is given.

             (4)  Subject to this section, the document containing the advice must also set out details of:

                     (a)  any benefit or advantage, whether pecuniary or not and whether direct or indirect, that the person giving the advice, or an associate of the person, has received, or will or may receive, in connection with the giving of the advice or the issue of a life policy to the person to whom the advice is given; and

                     (b)  any other pecuniary or other interests, whether direct or indirect, of the person giving the advice, or an associate of the person, that may reasonably be expected to be capable of influencing the person in giving the advice.

             (5)  Subsection (3) does not apply to a life insurance advice in respect of a life policy, or a kind of life policy, prescribed for the purposes of this subsection.

             (6)  Subsection (4) does not apply:

                     (a)  in relation to any fees or commission that the person giving the advice has received directly, or will or may receive directly, from the person to whom the advice is given; or

                     (b)  to life insurance advice in respect of a life policy, or a kind of life policy, prescribed for the purposes of this paragraph.

             (7)  If:

                     (a)  a life broker, or a life insurance adviser of a life broker, gives life insurance advice to a person in respect of a risk insurance policy; and

                     (b)  the person may reasonably be expected to rely on the advice;

the document containing the advice need not contain the details specified in subsection (4), but, if it does not contain those details, it must include a statement notifying the person that he or she may ask the life broker, or life insurance adviser, as the case may be, to supply the person with those details.

             (8)  Material included in a document under subsection (3), (4) or (7) must be in writing that is not less legible than the other material in the document.

39   Life insurance advice must have a reasonable basis

             (1)  A life broker, or a life insurance adviser of a life broker, who gives life insurance advice to a person who may reasonably be expected to rely on it must have a reasonable basis for giving the advice to the person.

             (2)  For the purposes of subsection (1), a life broker, or a life insurance adviser of a life broker, does not have a reasonable basis for giving life insurance advice to a person unless:

                     (a)  having regard to the person’s objectives, financial situation and particular needs, the broker or adviser has given such consideration to, and conducted such investigation of, the subject matter of the advice as is reasonable in all the circumstances; and

                     (b)  the advice is based on that consideration and investigation.

             (3)  Subsection (1) does not apply to life insurance advice in respect of a prescribed life policy, or kind of life policy.

40   Life broker must not arrange for issue or variation of a life policy in certain cases

             (1)  A life broker is guilty of an offence punishable, on conviction, by a fine not exceeding 200 penalty units if:

                     (a)  the life broker arranges for the issue of a life policy to, or the variation of a life policy at the request of, a person (the client ); and

                     (b)  the client has received life insurance advice in respect of the life policy from the life broker or a life insurance adviser of the life broker; and

                     (c)  the advice does not meet the requirements of section 38, or the person who gave the advice contravened section 39 in giving the advice; and

                     (d)  the client has not indicated in writing to the broker that the person does not rely on the advice in entering into, or varying, the policy, as the case may be.

Note:          Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

             (2)  In this section, a reference to life insurance advice in respect of a life policy includes life insurance advice in respect of a class of life policies that includes that policy.

41   Life broker’s civil liability if section 38 or 39 is contravened

             (1)  Subject to this section, if:

                     (a)  a life broker, or a life insurance adviser of a life broker, contravenes section 38 or 39 in relation to life insurance advice given to a person by the broker or adviser; and

                     (b)  the person engages in a life insurance activity in reliance on the advice; and

                     (c)  it is reasonable, having regard to the advice and all other relevant circumstances, for the person to have relied on the advice; and

                     (d)  the person suffers loss or damage as a result of so acting in reliance on the advice;

the person may recover the amount of the loss or damage by action against the life broker in a court of competent jurisdiction.

             (2)  It is a defence to an action based on an alleged failure to comply with subsection 38(4) if the life broker proves that the person who gave the relevant advice was not, and cannot reasonably be expected to have been, aware of the benefit, advantage or interest not disclosed in the advice.

             (3)  It is a defence to an action based on an alleged failure to comply with section 38 if the life broker proves that a reasonable person in the same circumstances as the person to whom the advice was given could be expected to have acted in reliance on the advice even if the person who gave the advice had complied with that section in relation to the advice.

             (4)  In addition to other relief granted in an action under subsection (1), the court, if it thinks it necessary in order to do justice between the parties:

                     (a)  may make an order declaring a life policy (other than a group policy) to be void; and

                     (b)  if it makes an order under paragraph (a), may make all or any of the following further orders:

                              (i)  an order directing the broker to repay to the plaintiff an amount equal to the total amount paid by the plaintiff to the broker in connection with the policy less an amount equal to the total amount paid by the broker to the relevant life company in connection with the life policy under section 27 of the Insurance (Agents and Brokers) Act 1984 ;

                             (ii)  an order directing the broker to repay to the relevant life company an amount equal to the total of the amounts paid by the company to the broker, or retained by the broker, in connection with the life policy under an agreement between the broker and the company;

                            (iii)  an order directing the relevant life company to pay to the plaintiff an amount equal to the total amount paid to the company in connection with the policy by the plaintiff, or by the broker under section 27 of the Insurance (Agents and Brokers) Act 1984 .

             (5)  An order under paragraph (4)(b) may include a direction for the payment of an amount of interest specified in, or calculated in accordance with, the order.

42   False or misleading statements etc.: civil liability

             (1)  If:

                     (a)  a person engages in a life insurance activity in reliance on a statement made by, or information provided by, a life broker or a life insurance adviser of a life broker in or in connection with giving the person life insurance advice; and

                     (b)  the statement or information is false or misleading in a material particular, or there is a material omission from the statement or information; and

                     (c)  the person suffers loss or damage as a result of so acting in reliance on the statement or information;

the person may recover the amount of the loss or damage by action against the life broker in a court of competent jurisdiction.

             (2)  In addition to other relief granted in an action under subsection (1), the court, if it thinks necessary in order to do justice between the parties:

                     (a)  may make an order declaring a policy (other than a group policy) to be void; and

                     (b)  if it makes an order under paragraph (a), may make all or any of the following further orders:

                              (i)  an order directing the broker to repay to the plaintiff an amount equal to the total amount paid by the plaintiff to the broker in connection with the policy less an amount equal to the total amount paid by the broker to the relevant life company in connection with the life policy under section 27 of the Insurance (Agents and Brokers) Act 1984 ;

                             (ii)  an order directing the broker to repay to the relevant life company an amount equal to the total of the amounts paid by the company to the broker, or retained by the broker, in connection with the life policy under an agreement between the broker and the company;

                            (iii)  an order directing the relevant life company to pay to the plaintiff an amount equal to the total amount paid to the company in connection with the policy by the plaintiff, or by the broker under section 27 of the Insurance (Agents and Brokers) Act 1984 .

             (3)  An order under paragraph (2)(b) may include a direction for the payment of an amount of interest specified in, or calculated in accordance with, the order.