Consumer groups reject FSC rehabilitation proposal

The Financial Services Council (FSC) has hit a substantial consumer group obstacle in its push to allow life insurers to enter the health insurance space with the aim of getting injured workers back to work sooner.

Key consumer groups the Financial Rights Legal Centre, Consumer Action Law Centre and Choice have told a Parliamentary Committee that there is a high risk of the life insurers having conflicts of interest in such arrangements.

“There are significant issues that would come into play if life insurers were to play a larger role in rehabilitation – particularly the obvious conflicts of interest that arise with life insurers having a financial interest in encouraging rehabilitation even where it may not be appropriate, in order to decrease or cease ongoing income protection (IP) or total and permanent disability (TPD) payments,” the submission said.

The submission, filed with the Parliamentary Joint Committee on Corporations and Financial Services argued that “the protection, support and best interests of incredibly vulnerable consumers must be front and centre of any proposed reform in this area”.

Elsewhere in the submission, the consumer groups referred to the likelihood of “a clear conflict of interest and ‘perverse incentives’ in a system where the insurer is both the payer of claims and is involved in arrangements for claimants to return to work”.

It said the consumer groups supported the view that there needed to be an “arms-length” relationship between the two activities.

“On its face, this type of system would exacerbate the risk of insurers positively assessing people’s ability to work and forcing them into work when it is unsuitable or premature,” it said. “An increase in people being pressured by insurers into returning to work when it is not appropriate is the most significant risk in the FSC’s proposal.”

Related Content




Not sure where the conflicts are here. Some lawyers make their money by proving that people cannot work, which is particularly perverse if they can get back to work. We should not be putting victims of disease or accident through legal actions.
When is encouraging rehabilitation not appropriate? It is often painful and sometimes even humiliating, but - in my view - always better.

if legal fees were capped to 3% of payout, the problem of lawyers creaming money from distressed clients would stop.....

I agree with the consumer groups on this. The FSC is a corrupt lobby group all about profit. This "initiative" is no more than a drive for them to be able to force claimants back to work, particularly in the area of mental health.

fox in the hen house, no. nice try FSC. Rebuilt some trust first through actions, and then see.

Add new comment