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Life Insurance (Conduct and Disclosure) Bill 1998

Part 2 Duties of life companies

   

16   Effect of Part

                   This Part contains provisions:

                     (a)  requiring life companies to provide owners and prospective owners of life policies, and group members and prospective group members of certain group schemes, with the information they reasonably require to enable them to make properly informed decisions whether to engage in certain life insurance activities; and

                     (b)  providing appropriate redress for people who suffer loss or damage as a result of relying on information that is false or misleading, or from which there are material omissions.

17   Duty of life companies to provide information

             (1)  Subject to subsection (2), a life company must ensure that, as far as reasonably practicable:

                     (a)  owners and prospective owners of life policies issued by the company receive the information they reasonably require to enable them to make informed decisions whether to engage in a life insurance activity relating to any of those life policies; and

                     (b)  group members and prospective group members receive the information they reasonably require to enable them to make informed decisions whether to engage in a life insurance activity relating to a group policy issued by the company; and

                     (c)  there are no material omissions from the information, and it is not false or misleading in a material particular.

             (2)  Paragraph (1)(b) does not apply in relation to a group scheme included in a prescribed class of group schemes.

18   Disclosure rules

             (1)  The regulations may make provision relating to the production and provision of information by life companies about life policies issued by them.

Note:          Regulations of the kind mentioned in subsection (1) are called disclosure rules (see subsection 4(1)).

             (2)  Without limiting subsection (1), disclosure rules may include provisions:

                     (a)  requiring a life company to produce specified kinds of information about some or all of the life policies issued by it; and

                     (b)  specifying the form in which, and the times or stages at which, a life company must provide the information to the owners or prospective owners of those life policies; and

                     (c)  requiring a life company to keep such records relating to the production or provision of the information, or both, as are prescribed by the rules; and

                     (d)  requiring a life company to lodge with ASIC documents used in particular cases for the purposes of the rules.

             (3)  The requirements of the disclosure rules are in addition to, and do not limit, section 17.

19   ASIC may give directions

             (1)  If it appears to ASIC that a life company has, by an act or omission, contravened section 17, or a provision of the disclosure rules, ASIC may give the company a written notice:

                     (a)  informing the company that ASIC is considering giving the company a direction under this section; and

                     (b)  setting out particulars of the act or omission, and the provision alleged to have been contravened; and

                     (c)  inviting the company to make submissions to ASIC on the question whether a direction under this section should be given; and

                     (d)  specifying the period within which the submissions must be given to ASIC.

             (2) The specified period must be a period of at least 14 days, starting on the day when the notice is given.

             (3)  ASIC may give a written direction to the life company if:

                     (a)  the period specified in the notice has expired; and

                     (b)  after considering the submissions (if any) made by the company, ASIC is satisfied that the company has contravened section 17, or the provision of the disclosure rules, as the case may be, by the act or omission specified in the notice.

             (4)  The direction may:

                     (a)  require the company not to do a specified act; or

                     (b)  require the company to do a specified act.

             (5)  The direction takes effect:

                     (a)  on the day specified in the direction; or

                     (b)  if no day is so specified—on the day on which the direction is given to the company.

             (6)  A life company is guilty of an offence if:

                     (a)  it does, or fails to do, an act; and

                     (b)  doing, or failing to do, the act results in a contravention of a direction (including a direction as varied) given to it under this section.

Penalty:  300 penalty units.

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

20   Revocation or variation of directions

             (1)  If ASIC thinks that a direction given to a life company under section 19 is no longer required or should be varied, ASIC must, by written notice given to the life company, revoke or vary the direction.

             (2)  If a life company to which a direction has been given asks ASIC, in writing, to revoke or vary the direction, ASIC must:

                     (a)  if ASIC thinks that the direction is no longer necessary or should be varied—revoke or vary the direction; or

                     (b)  in any other case—refuse to revoke or vary the direction.

             (3)  ASIC must give to the life company written notice of a decision made under subsection (2).

21   ASIC may issue stop orders

             (1)  If it appears to ASIC that:

                     (a)  promotional material issued by a life company contains information that is false or misleading in a material particular; or

                     (b)  there is a material omission from any such promotional material;

ASIC may, by written order (a stop order ) given to the company, direct the company not to issue the promotional material while the stop order is in force.

             (2)  A stop order:

                     (a)  comes into force when it is made, or, if a later time is specified in the order as the time when the order comes into force, at that later time; and

                     (b)  remains in force until it is revoked.

             (3)  A life company is guilty of an offence if:

                     (a)  it issues promotional material; and

                     (b)  the issuing of the material results in a contravention of a stop order that is in force.

Penalty:  300 penalty units.

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

22   False or misleading information: civil liability

             (1)  If:

                     (a)  a person engages in a life insurance activity relating to a life policy issued by a life company; and

                     (b)  the person engages in that activity in reliance on information:

                              (i)  provided to the person by the company; or

                             (ii)  contained in promotional material issued by the company; and

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

                     (d)  the person suffers loss or damage as a result of engaging in that activity in reliance on the information;

the person may recover the amount of the loss or damage by action in a court of competent jurisdiction against a person or persons liable in respect of the loss or damage.

             (2)  The following persons are jointly and severally liable in respect of the loss or damage referred to in subsection (1):

                     (a)  the life company;

                     (b)  the persons who were directors of the life company when the information was provided to the person, or the promotional material was issued, as the case may be.

             (3)  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, may:

                     (a)  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), make a further order directing the defendant or defendants to pay to the plaintiff an amount equal to the amount paid by the plaintiff to the company in connection with the policy, including interest on that money.

             (4)  A person other than a life company is not liable in an action referred to in subsection (1) if the person proves that:

                     (a)  the false or misleading statement or the omission was due to reasonable reliance on information or advice given by another person; or

                     (b)  the omission was due to a mistake; or

                     (c)  the information was provided, or the promotional material was issued, without the person’s knowledge;

and the person took reasonable steps and exercised due diligence to ensure that all information provided by the company, or contained in promotional material issued by it, was true and not misleading and that there were no material omissions from the information.

             (5)  In paragraph (4)(a):

another person does not include a person who was a director, employee or agent of the defendant when the information was provided.

             (6)  A person is not liable in an action referred to in subsection (1) to a person who suffered loss or damage as a result of engaging in a life insurance activity in reliance on information that was false or misleading, or from which there was an omission, if it is proved that, when the last-mentioned person engaged in the activity, that person knew that the information was false or misleading, or was aware of the omitted matter.

23   Order to disclose information or publish advertisement etc.

             (1)  If the Court is satisfied that a life company has issued promotional material in or in connection with any of the company’s life policies, and that:

                     (a)  the material contains information that is false or misleading in a material particular; or

                     (b)  there is a material omission from the material;

the Court may make an order or orders under this section.

             (2)  The Court may only make an order under subsection (1) on the application of ASIC.

             (3)  The Court may make either or both of the following orders:

                     (a)  an order requiring the life company to disclose, at the company’s expense and in the manner specified in the order, specified information to the public, or to a specified person or persons;

                     (b)  an order requiring the company to issue, at the company’s expense and in the manner specified in the order, promotional material whose terms are specified in, or are to be determined in accordance with, the order.

             (4)  An order referred to in paragraph (3)(a) must specify:

                     (a)  the information or kind of information required to be disclosed by the order, being information that is:

                              (i)  in the possession of the company; or

                             (ii)  to which the company has access; and

                     (b)  in the case of information required to be disclosed to specified persons—the persons or the particular class of persons to whom the information must be disclosed.

             (5)  This section does not limit section 63.

24   False or misleading information: criminal liability

             (1)  If:

                     (a)  a life company provides a person with prescribed information; and

                     (b)  the life company does so knowing that the information is false or misleading in a material particular, or there is a material omission from the information;

the life company is guilty of an offence.

Penalty:  300 penalty units.

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

             (2)  If:

                     (a)  a life company provides a person with prescribed information; and

                     (b)  the life company does so reckless as to whether the information is false or misleading in a material particular, or there is a material omission from the information;

the life company is guilty of an offence.

Penalty:  150 penalty units.

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

             (3)  In this section:

prescribed information means information provided to a person by a life company about all or any of the following:

                     (a)  the benefits that would or may be available to the person or to anyone else if a life policy were issued to the person by the company, or if the person became a beneficiary under a group policy issued by the company;

                     (b)  the circumstances under which those benefits would or may be so available;

                     (c)  the premium or premiums that would be payable in respect of such a life policy;

                     (d)  the obligations to which the person would or may be subject if a life policy were issued to the person by the company, or if the person became a beneficiary under a group policy issued by the company.