(Re)Insurance and Regulation Focus - fortnight commencing 23 June 2025
23 June 2025
Key developments in the last fortnight
ASIC cancelled AFSL and banned RM permanently
ASIC has cancelled the AFSL of Financial Services Group Australia Pty Ltd (FSGA) and permanently banned its Responsible Manager (RM) following a number of breaches of licensee obligations including supervisory arrangements for representatives to provide appropriate financial product advice and meeting basic financial and reporting requirements. ASIC found that the RM of FSGA had acted ‘on paper’, knowing that he was not fulfilling his duties as a RM, which led to FSGA’s breaches as there was no one to supervise representatives and ensure licensee compliance. ASIC emphasised that the RM’s role is crucial for licensees to establish and maintain the organisational competence required for licensees and that the nominated RM must have direct responsibility for significant day-to-day decisions about the financial services provided.
Global insurers hit by UK court’s Russian jet decision
The UK’s High Court has ruled that insurers must cover claims made by aircraft lessors for commercial jets impounded by Russia in the wake of its 2022 invasion of Ukraine, meaning that billions could be paid out by various global insurers including Lloyd's syndicates, AIG, Chubb and Swiss Re. In this ruling, Justice Butcher found that claims for the loss of 147 aircraft and 16 engines (worth about $4.5 billion) could be pursued under war-risk policies, bringing a substantial win for lessors seeking recompense for assets nationalised by Russia under Russian legislation, which have been deemed “lost”. This outcome may lead to claims involving an estimated 400 aircraft at a value of $20 billion trapped in Russia. It is also likely to trigger scrutiny and reassessment of aviation war-risk policies and serve as guidance for other jurisdictions.
Lloyd's, AIG, Chubb, Swiss Re hit by Russian jet decision in UK court
Green light for Allianz’s proposed acquisition of RAA Insurance
The ACCC has announced that it will not oppose Allianz Australia Insurance Limited’s proposed acquisition of the Royal Automobile Association of South Australia’s personal insurance business (RAAI). The ACCC found that the proposed acquisition is unlikely to substantially lessen competition, considering that Suncorp and IAG are the two largest insurers in Australia and mid-tier insurers Auto & General and Youi will likely continue competing effectively with Allianz in South Australia post acquisition. The ACCC also noted that RAAI had been struggling in the market due to extreme weather events and rising costs for reinsurance and compliance. The ACCC will soon consider IAG’s proposed acquisition of RAC WA.
Allianz’ proposed acquisition of RAA Insurance not opposed
The regulators update on review of life insurance premium practices
APRA and ASIC provided an update on the progress of life insurers and friendly societies in addressing issues related to premium increases, product design and disclosure and marketing materials. The regulators commenced a joint review in late 2022 to investigate repeated premium increases in life insurance that do not align with policy terms and disclosure and marketing materials, requesting life companies to review their premium practices, with improvements made by life companies in re-rating practices, marketing and disclosure materials, and product governance. Council of Australian Life Insurers (CALI) has published a fact sheet to explain changes in premium label descriptions for new retail advised business. However, it is still too early to fully assess their effectiveness in addressing the concerns around premium increases. The regulators will continue to engage the industry for further uplift to ensure life products meet consumers’ needs while maintain premium stability.
Premium increases in life insurance: Are life companies addressing issues identified by regulators?
Global regulators cracking down unauthorised finfluencers
During the Global Week of Action Against Unlawful Finfluencers joined by nine international market regulators from UK, UAE, Hong Kong and Canada, ASIC has issued warning notices to 18 finfluencers on social media who are suspected of providing unlicensed financial advice in relation to high-risk financial products to Australians. The global regulators together used regulatory and enforcement powers to warn unauthorised finfluencers and reminded consumers of the risks of unauthorised and misleading finfluencer content. Following the release of ASIC INFO 269, which provides guidance on compliance of finfluencers content, ASIC saw more finfluencers complying with the licensing regime. However, there are remaining concerns about finfluencers providing unauthorised advice and making misleading representations online to promote high-risk investments products, which can cause harm to young Australians who tend to rely on social media advice.
ASIC cracks down on unlawful finfluencers in global push against misconduct
RAMS sued for systemic misconduct in arranging home loans
ASIC has sued RAMS Financial Group (RAMS), a wholly owned subsidiary of Westpac, for systemic misconduct in arranging home loans. RAMS is an Australian Credit Licensee operating through a franchise network to provide non-lending services for home loans funded by Westpac. ASIC’s allegations are that RAMS breached its licensee obligations under the National Consumer Credit Protection Act and engaged in unlicensed conduct. RAMS admitted to conducting business with unlicensed persons and failures to supervise representatives and ensure adequate polices and procedures are in place. This led to widespread misconduct by RAMS staff and franchisees, as ASIC found that they acted unlawfully to submit loan applications for customers who were not qualified for the loan to boost commissions. ASIC is now seeking declarations and pecuniary penalties against RAMS in the Federal Court.
ASIC sues RAMS for systemic misconduct in arranging home loans
APRA Executive Director of Cross Industry Risk concerned about operational resilience risks facing the financial sector
In a speech given to the 2025 AFIA Risk Summit, APRA Executive Director of Cross Industry Risk has used the analogy of the 1991 Perfect Storm (and 2000 Movie for Clooney fans) to warn industry leaders of three key risks to operational resilience facing the financial sector. These risks—namely vulnerability to cyber attacks, third party reliance for the delivery of critical operations, and geopolitical shifts—if poorly managed can have significant effects on the financial viability of regulated entities. The Executive Director called on entities to invest in their resilience to ensure that they have a capability to respond to these risks in a manner that will retain the trust of key stakeholders. This comes as APRA and its regulated population readies themselves for the 1 July commencement of CPS 230 governing operational risk management.
APRA Executive Director of Cross-industry Risk Chris Gower speech to AFIA Risk Summit 2025
Key dates
- 25 June 2025 – consultation closes on ASIC’s proposal to remake basic deposit and general insurance product distribution legislative instrument.
- 27 June 2025 – submissions close for AUSTRAC’s consultation on new AML/CTF Rules.
- *1 July 2025 – APRA prudential Standard CPS 230 commences.*
In case you missed it
We are pleased to share that Matt Ellis has been recognised as finalist for Financial Services Partner of the Year and Insurance Partner of the Year by the Lawyers Weekly awards.
