Financial Sector Reform (Hayne Royal Commission Response) Act 2020 (135 of 2020)
Schedule 7 Claims handling and settling services
Corporations Act 2001
18 After Division 3 of Part 7.7
Division 3A - Cash Settlement Fact Sheet
Subdivision A - When this Division applies
948B Situation in which this Division applies
This Division applies in relation to the provision of a claims handling and settling service in the following circumstances:
(a) the service is offering to settle all or part of a claim under a general insurance product using a cash payment;
(b) the service is provided:
(i) by a financial services licensee (the providing entity ); or
(ii) by a person (the providing entity ) in their capacity as authorised representative of a financial services licensee (the authorising licensee ), or of 2 or more financial services licensees (the authorising licensees ); or
(iii) by another person on behalf of a financial services licensee (the providing entity ), or on behalf of 2 or more financial services licensees (each of which is a providing entity );
(c) the service is provided to a person (the client ) as a retail client who is insured under the insurance product;
(d) cash payment is not the only option legally available to the client to settle the claim, or the part of the claim.
Subdivision B - Requirement for a Cash Settlement Fact Sheet to be given
948C Obligation to give client a Cash Settlement Fact Sheet
(1) The providing entity must give the client a Cash Settlement Fact Sheet in accordance with this Division.
(2) A person contravenes this subsection if the person contravenes subsection (1).
Note: This subsection is a civil penalty provision (see section 1317E).
948D Timing for giving a Cash Settlement Fact Sheet
The Cash Settlement Fact Sheet must be given to the client when the offer to settle all or part of the claim using a cash payment is made.
Subdivision C - Contents of a Cash Settlement Fact Sheet
948E Title of Cash Settlement Fact Sheet
(1) The title "Cash Settlement Fact Sheet" must be used on the cover of, or at or near the front of, a Cash Settlement Fact Sheet.
(2) In any other part of the Cash Settlement Fact Sheet, "Cash Settlement Fact Sheet" may be abbreviated to "CSFS".
948F Content of Cash Settlement Fact Sheet
(1) A Cash Settlement Fact Sheet must contain:
(a) a statement outlining the options for settlement legally available to the client under the insurance product; and
(b) a statement setting out the sum insured under the insurance product; and
(c) a statement setting out:
(i) the total amount of the cash settlement being offered; and
(ii) the amount of each component of the total amount of cash settlement being offered (such as components representing the sum insured, additional payments relating to emergencies and ex gratia payments); and
(d) a statement that the client should consider obtaining independent legal or financial advice before settling; and
(e) if, despite accepting the offer, the client would be entitled under the insurance product to have the payout reviewed - an outline of the rights of review; and
(f) any other information prescribed by the regulations.
(2) The Cash Settlement Fact Sheet must be given in writing.
(3) The Cash Settlement Fact Sheet must be dated. The date must be the date on which the Cash Settlement Fact Sheet was prepared or its preparation completed.
(4) The Cash Settlement Fact Sheet may also contain other information.
(5) The information included in the Cash Settlement Fact Sheet must be worded and presented in a clear, concise and effective manner.
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