Bert Van Manen (Forde, Liberal Party) Share this | Hansard source

It's a pleasure to rise to speak on the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 and the Corporations (Fees) Amendment (Hayne Royal Commission Response) Bill 2020, in recognition of the continued process of implementing the recommendations of the Hayne royal commission.

Where I'll agree with the member for Rankin is that it was very sad and disappointing to see the stories that were told and the evidence that was given at the Hayne royal commission, particularly in regard to some of our largest institutions in this country, which had garnered enormous community respect over the years and, more importantly, enormous community trust—to see that that trust had been taken for granted and that they had made decisions and done things which had an adverse impact on the very people that they were supposed to provide services to and to look after appropriately.

Always when I stand here in this House and we're passing legislation or making laws because of misconduct or poor conduct by major institutions in our economy, which our economy is actually so reliant on, I find it extremely disappointing. I would prefer that those institutions actually conduct themselves in a manner that is consistent with community standards and that recognises the level of trust and the important role they have in our society so that we don't get to this point where we have to pass laws as a consequence of their poor conduct. I would reflect too on my time and involvement in the Parliamentary Joint Committee on Corporations and Financial Services. Through that committee we identified a number of issues around poor lending practices and the way the banks interacted with customers around their loans through the GFC and subsequently. So I support the member for Rankin's comments to a degree, but I'm also pleased to see that we're now taking those next steps in relation to implementing these recommendations.

I want to focus particularly on schedule 2 of the bill, which replaces the consumer's duty of disclosure with a new duty to take reasonable care not to make a misrepresentation to an insurer and which also amends the remedies available to life insurers when avoiding life insurance contracts. That gives effect to recommendations 4.5 and 4.6 of the royal commission. Back in March of 2018, again on the Parliamentary Joint Committee on Corporations and Financial Services, we tabled a report into the life insurance industry, and we focused on areas where we felt as a committee substantial changes would be required to ensure the life insurance industry is held to account. One of the reasons for that was that we had an enormous amount of testimony—and even since the discussion has continued—around what happens at claim time for holders of insurance policies, whether it be life insurance, total and permanent disability cover or income protection insurance. People take out those policies in good faith and fill out very detailed application forms which ask a wide range of medical information. The benefit of the changes in this bill is that there's a requirement now for an insurance company, if they are not satisfied or not sure or not clear about the information that a consumer has provided on their application, to ask for further information at the time of application.

I think that is a very good move. In the event of a claim, what it does, I hope, is clear up, by virtue of the process at application time, the risk that an insurance company will turn around and say, 'Well, you didn't disclose X, Y and Z at the time of application.' I think that is a very good measure for people who are looking to take out an insurance policy. That's not a carte blanche for them to not provide the information that's sought on the application forms—and there's still a requirement to properly provide the information—but, if the insurance company accepts the application based on the information provided, if the insurance company has asked additional questions at the time of application, then, at the event of a claim, unless there is a deliberate misrepresentation or deliberate omission, it shouldn't have the opportunity to go searching far and wide for other reasons to deny the claim. We had evidence at that inquiry that that was the case.

Amongst the range of other measures in this bill—there are some seven schedules or so—I wanted to focus on this particular issue because I think this is a very important issue from the point of view of consumer protection. People pay good premiums for life insurance, TPD cover, income protection cover, trauma insurance cover. The vast majority of people do the right thing in providing the right information at the time of the application so that insurance companies can make informed decisions about whether or not they accept that cover. It was disappointing that, as we saw in that inquiry, insurance companies sought to find ways, on occasion, to deny a claim for things that were unrelated to the matter of that claim.

I hope the provisions in this bill will give consumers more certainty and make it clear to the insurance companies that they are responsible for to asking the questions necessary to determine whether they're going to offer that insurance cover and that, if they accept that, then in the event of a claim the claimant can have the confidence that they're going to receive the benefit of that policy and therefore have that security for themselves and their families in what would be a very difficult time.

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