A recent examination by Financial Rights, an independent legal organisation offering legal advice and financial counselling, has highlighted significant differences in how Australian life insurers address family violence.
The audit, conducted in August and September 2023, assessed insurers’ compliance with the Life Insurance Code of Practice, which requires companies to publish policies detailing support for those affected by family violence.
The review compared the insurers’ policies against the Financial Services Council’s (FSC) Life Insurance Family and Domestic Violence Policy, which serves as a recommended, non-binding framework. The aim was to establish a benchmark for current practices and encourage improvement.
The audit discovered a considerable variation in adherence to the recommended standards.
Out of 17 life insurers, only one met all 11 suggested areas, while more than half scored 5.5 or less, indicating inconsistent application of the guidelines.
In response to the audit’s findings, Financial Rights recommended adopting comprehensive measures similar to those found in Noble Oak’s policy, which covers each of the 11 suggested areas.
Additional recommendations included:
The complete findings, published in May 2024, are accessible on Financial Rights’ website.
The organisation has also submitted insights to the Parliamentary Joint Committee on Corporations and Financial Services regarding financial abuse within the regulatory framework.
The submission pointed out systemic issues, such as the absence of mandatory preventive measures by financial service providers and the inconsistency in rules across sectors, which complicates the process for victims seeking help.
Financial Rights emphasised the role of financial services providers in tackling financial abuse, an issue intertwined with the broader goal of ending violence against women and children in Australia.
It highlighted the importance of these providers in identifying, preventing, and addressing financial abuse, thereby supporting victims and reducing the long-term impacts of such abuse.
The organisation calls for clear, enforceable protections for vulnerable customers and suggests that the Australian Securities and Investments Commission (ASIC) be given authority similar to the UK’s Financial Conduct Authority to establish and enforce rules.
In a similar vein, the Centre for Women’s Economic Safety (CWES) has been urging Australian general insurance companies to improve and restructure their offerings to prevent insurance products from being exploited for financial abuse.
