Welcome to the October edition of our Financial Services Bulletin

2017 ALUCA TurksLegal Scholarship - And the winner is...

Jennifer Jackson, Rehabilitation Consultant at CommInsure was awarded this year’s prestigious ALUCA TurksLegal Scholarship for her outstanding essay on genetic testing. The 1st runner-up was, Carola Moore, Claims L&D Manager, AMP for her paper on Getting the Capabilities Right. The 2nd runner-up was Amanda Cruikshank, Rehabilitation Consultant, AIA for her paper on Bringing the Benefits of the Return to Work Philosophy to Superannuation.

Congratulations to Jennifer, Carola and Amanda! Thank you to everyone who submitted an application for this year’s ALUCA TurksLegal Scholarship and we look forward to 2018.

Read on for industry news, a whole lot of important case law developments and our selection of a recent FOS and SCT determination.

We hope you enjoy this edition of the FSB!

Industry News

Shelf Space Fees for Preferred Product Lists in Regulator’s Sights?
In February this year the Federal Parliament passed the Corporations Amendment (Life Insurance Remuneration Arrangements) Bill that removed the exemption from the ban on conflicted remuneration in the Corporations Act for certain life insurance products.

ASIC Reduces Commission Caps
As part of the raft of changes to do with conflicted adviser remuneration that began with the legislation passed by the Federal parliament earlier in the year1 ASIC has launched a new instrument fixing the maximum amount of fees and continuing commissions advisers can charge on life insurance risk products.

Cases and Tribunal Decisions

TPD: Court of Appeal confirms the Jones view on ETE
Hannover Life Re of Australasia v Jones [2017] NSWCA 233
This decision was of particular concern to life insurers as the notion that an insured must have done a job (or a similar job) in the past, to be ‘fitted by ETE’ for a job suggested by an insurer (noting that many entry level jobs require no ETE) seemingly created an additional wrinkle on the ETE concept.

Not sure who to pay? Have you considered s215 of the Life Insurance Act 1995?
MLC Limited v Crickitt [2017] FCA 898
This decision is a timely reminder of the option available to insurers to apply under s215 of the Life Insurance Act to discharge their liability under a policy of Life Insurance where there is uncertainty as to whom to pay (ie; the Estate or a beneficiary).

Cancellation for Fraudulent Claim
AIA Australia Ltd v Richards (No 3) [2017] FCA 1069
Following the decision of Justice Einstein in Walton, it seemed the courts were hesitant to grant insurer’s the right to cancel a contract of life insurance on the basis of a fraudulent claim. In Walton, Einstein J determined that no such right existed under statute having regard to s56(1) of the Insurance Contracts Act. The recent decision in AIA v Richards has reversed this approach, with Allsop CJ taking an alternate view.

Federal Court confirms that insurers may withhold reasonable costs from payment into Court
Swiss Re Life & Health Australia Ltd v Public Trustee of Queensland [2017] FCA 963
Where a life insurer can obtain no sufficient discharge with respect to the payment of insurance benefits, it may pay that money into court pursuant to the provisions of s215 of the Life Insurance Act. One of the circumstances in which a life insurer cannot obtain a sufficient discharge is where the person to whom the benefit would otherwise be payable is allegedly criminally involved in the death of the life insured. Most recently, this arose in the context of a claim upon a life insurance policy issued by Swiss Re Life & Health.

Group IP: Terms of deed and policy must be paramount in SCT’s review
AIA Australia Ltd v Lancaster [2017] FCA 962
On 18 August 2017, Allsop CJ gave judgment on an appeal against a determination of the SCT about an income protection benefit under a group insurance policy.

RECENT FOS & SCT DECISIONS

• You Booze, You Lose,
• When You’ll Pay for Delay

This publication is copyright and no part may be reproduced in any form without the permission of TurksLegal. This bulletin is current at its date of publication. While every care has been taken in its preparation, it does not constitute legal advice and should not be relied upon for this purpose. Specific legal advice should be sought on particular matters. TurksLegal does not accept responsibility for any errors in or omissions from this publication. For any enquiries, please contact one of the Partners at TurksLegal.