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Insurance industry’s response to new laws slammed as ‘scare tactics’

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The government will introduce draft legislation aimed at protecting consumers from unfair insurance contracts as a response to the findings in the banking royal commission.

Initially, the Coalition said they would not rush their response to the banking royal commission but after constant pressure from the opposition, the draft bill is underway.

Treasurer Josh Frydenberg has said current laws prevent consumers from negotiating fair terms with their insurer.

The insurance industry has responded, claiming some areas of insurance will no longer be covered if they’re made to comply with the new legislation.

Consumer Action Law Centre CEO Gerard Brody tells Ross Greenwood the response is unacceptable.

“It’s scare tactics through and through and I think we should expect better from our insurance industry.”

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The Treasurer would also ban grandfathered conflicted remuneration paid to advisors.

Financial Planning Association CEO Dante De Gori tells Ross there is one important aspect that needs to be changed.

“Just because the advisor stops receiving those trail commissions it doesn’t actually mean the consumer stops paying them out of their account.

“It’s embedded in the fees. In order for this legislation to be effective… you need to actually enforce the fact that these payments are stopped being paid out of the customers’ account and are being rebated back to them.”

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