Section 916A of the Corporations Act sets out how an Australian financial service licensee (AFS licensee) may authorise a person (Authorised Representative) to provide a specified financial service or financial services on behalf of the AFS licensee. What are the rules for the sub-authorisation of employees who provide a claims handling or settling service?
Section 916B(1) of the Corporations Act provides that generally an Authorised Representative cannot make a person their Authorised Representative, nor can they make a person an Authorised Representative of the AFS licensee. However, if the Authorised Representative has consent from the AFS licensee, then they are permitted to sub-authorise individuals to provide a financial service (under subsection 916B(3)).
The Financial Sector Reform (Hayne Royal Commission Response) Act 2020 made “claims handling and settling service” (CHSS) a financial service.
Some AFS licensees who are authorised to provide a CHSS appoint Authorised Representatives to provide that CHSS. Where the AFS licensee consents, those Authorised Representatives may sub-authorise a significant number of employees to provide the CHSS. Each of those employees is, pursuant to subsection 916B(6), an Authorised Representative of the AFS licensee.
ASIC Corporations (Notification of Authorised Representatives) Instrument 2022/301 exempts Authorised Representatives from the requirement to notify ASIC of the sub-authorisation of employees who provide a claims handling or settling service in relation to general or consumer credit insurance products.
The Instrument includes the provision of a CHSS, in relation to general insurance and consumer credit insurance products, in the list of financial services in paragraph 916F(1AA)(d).
The effect is that an Authorised Representative is not required to notify ASIC of the sub-authorisation of an employee to provide a CHSS in relation to the specified insurance products.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
