Australian Capital Territory Numbered Acts Australian Capital Territory Numbered Actsinsert
Part 7.6A Financial penalties
394A Definitions—pt 7.6A
In this part:
"financial penalty notice"—see section 394D (3).
"ground for financial penalty"—see section 394B.
"minor contravention" means conduct by a licensed insurer that constitutes a ground for financial penalty that does not involve a serious contravention.
"serious contravention "means conduct by a licensed insurer that constitutes a ground for financial penalty that involves any of the following:
(a) dishonest or misleading conduct by the licensed insurer;
(b) underpayment or delay in paying defined benefits by the licensed insurer;
(c) failure by the licensed insurer to ensure protected information is disclosed only in accordance with section 371;
(d) failure by the licensed insurer to comply with an order of the ACAT made for this Act;
(e) anything else prescribed by regulation.
394B Meaning of ground for financial penalty —pt 7.6A
For this part, each of the following is a ground for financial penalty in relation to a licensed insurer:
(a) the licensed insurer has contravened this Act;
(b) the licensed insurer has contravened a condition of the MAI insurer licence;
(c) the licensed insurer has contravened the insurance industry deed.
394C Notice of proposed financial penalty
(1) The MAI commission may propose to impose a financial penalty on the insurer if the commission is satisfied that—
(a) a ground for financial penalty exists in relation to the insurer; and
(b) the imposition of the financial penalty is in the public interest.
(2) The MAI commission must give the insurer a written notice about the proposed financial penalty (a show cause notice ) stating—
(a) the grounds on which the commission is proposing to impose a financial penalty; and
(b) whether the proposed financial penalty is for a minor or serious contravention; and
(c) the amount of the proposed financial penalty; and
(d) that the insurer may give the commission a written submission about the proposed financial penalty not later than—
(i) for a minor contravention—15 business days after the day the insurer is given the notice; or
(ii) for a serious contravention—20 business days after the day the insurer is given the notice; or
(iii) if the commission agrees to a longer period—the agreed period.
394D Imposing financial penalties
(1) The MAI commission may impose a financial penalty on a licensed insurer if the commission—
(a) has given the insurer a show cause notice; and
(b) has considered any written submission given by the insurer in accordance with section 394C (1) (d); and
(c) has considered the matters prescribed by regulation; and
(d) is satisfied that—
(i) a ground for financial penalty exists in relation to the insurer; and
(ii) the imposition of the financial penalty is—
(A) in the public interest; and
(B) appropriate taking into account the nature of the contravention.
(2) A financial penalty must not be more than—
(a) for a minor contravention—$20 000; or
(b) for a serious contravention—$100 000.
(3) If the MAI commission imposes a financial penalty on a licensed insurer, the commission must give the insurer a notice (a "financial" penalty notice ) stating—
(a) that the commission has decided to impose a financial penalty on the insurer; and
(b) the amount of the financial penalty; and
(c) the grounds on which the penalty is being imposed; and
(d) that the notice is a financial penalty notice under this section; and
(e) for a serious contravention—that the insurer may request a mediation under section 394E if the insurer disagrees with the financial penalty; and
(f) that the penalty must be paid to the MAI commission in accordance with section 394F.
(4) In this section:
"show cause notice"—see section 394C (2).
394E Mediation for serious contravention financial penalty notice
(1) If the MAI commission imposes a financial penalty on a licensed insurer for a serious contravention, the insurer may make a written request to the commission for the matter to be mediated.
(2) A request under subsection (2) must be made within 10 business days after the day the insurer is given the financial penalty notice.
(3) A mediation under this section must be mediated by an accredited mediator.
(4) The mediator must be—
(a) a person who is independent of the MAI commission and the licensed insurer; and
(b) decided by agreement between the MAI commission and the licensed insurer.
(5) The fees and expenses of the mediator must be paid—
(a) as agreed between the MAI commission and the licensed insurer; or
(b) if there is no agreement—by each of them in equal proportions.
(6) After mediation, the MAI commission must give the mediator and the licensed insurer a written notice that—
(a) if the commission and insurer reach an agreement—confirms, varies or withdraws the financial penalty notice in accordance with the agreement; or
(b) if no agreement is reached—confirms the financial penalty notice.
(7) In this section:
"accredited mediator"—see section 321 (6).
394F Payment of financial penalty
(1) This section applies if the MAI commission imposes a financial penalty on a licensed insurer under section 394D (2).
(2) The licensed insurer must pay the financial penalty to the MAI commission not later than 15 business days after the later of—
(a) if the insurer requests a mediation under section 394E—the day the financial penalty is confirmed or varied under section 394E (6); and
(b) in any other case—the day the financial penalty notice is given to the insurer.
(3) A financial penalty may be recovered as a debt payable to the MAI commission.
Note An amount owing under a law may be recovered as a debt in a court of competent jurisdiction or the ACAT (see Legislation Act
, s 177).
Part 7.6B MAI insurer licences—directions to licensed insurers
394G Directions to licensed insurers—general
(1) This section applies if the MAI commission believes on reasonable grounds that a licensed insurer is contravening, has contravened or is likely to contravene—
(a) this Act; or
(b) a condition of the MAI insurer licence; or
(c) the insurance industry deed.
(2) The MAI commission may direct the licensed insurer to do 1 or more of the following things:
(a) rectify the contravention or avoid the likely contravention mentioned in subsection (1);
(b) comply with the Act, condition of the licence or insurance industry deed.
(3) A direction must be in writing and include the following:
(a) details of the licensed insurer's contravention or likely contravention;
(b) details of the thing required to be done or not done by the licensed insurer;
(c) the day by which the licensed insurer must comply with the direction;
(d) a statement that, under section 394H, the insurer may object to the direction.
(4) The licensed insurer must comply with the direction by the later of—
(a) the day stated in the direction; and
(b) if a later day is agreed between the MAI commission and the insurer—that day.
394H Objection to direction
(1) A licensed insurer may make a written objection to the MAI commission about a direction given to the insurer under section 394G.
(2) However, an objection may only be made on 1 or more of the following grounds:
(a) the stated contravention did not happen or the stated likely contravention is unlikely to happen;
(b) doing or not doing the stated thing would place an unreasonable cost burden on the insurer;
(c) the stated time for compliance is either not reasonable or not proportionate to the thing that must be done or not done.
(3) An objection does not operate to stay the direction or otherwise prevent action being taken based on the direction.
(4) As soon as practicable after receiving an objection, the MAI commission must review the direction and decide to—
(a) affirm the direction; or
(b) amend the direction; or
(c) set aside the direction and make a different direction; or
(d) withdraw the direction.
(5) After making a decision under subsection (4), the MAI commission must give the licensed insurer a written notice that states—
(a) the commission's decision; and
(b) the reasons for the decision; and
(c) if the decision is to amend the direction or set aside the direction and substitute it for a different direction—the day the amended or different direction takes effect.
394I Directions to licensed insurers—remediation plans
(1) The MAI commission may direct a licensed insurer to give the commission a proposed remediation plan if the commission believes on reasonable grounds that the insurer is contravening, has contravened or is likely to contravene—
(a) this Act; or
(b) a condition of the MAI insurer licence; or
(c) the insurance industry deed.
(2) A direction must be in writing and include the following:
(a) details of the licensed insurer's contravention or likely contravention (the identified contravention );
(b) a statement that the licensed insurer must give the MAI commission a proposed remediation plan;
(c) the day by which the licensed insurer must give the MAI commission the proposed remediation plan.
(3) The licensed insurer must give the MAI commission the proposed remediation plan by the later of—
(a) 15 business days after the day the direction is given to the insurer; and
(b) if a later day is agreed between the MAI commission and the insurer—that day.
(4) A licensed insurer must include the following details in a proposed remediation plan:
(a) the nature and extent of—
(i) the identified contravention mentioned in the direction given to the insurer; and
(ii) any other contravention or likely contravention (a further contravention ) that is the same as or similar to the identified contravention mentioned in the direction; and
(b) any action the insurer has taken, or proposes to take, to remediate the identified contravention and further contravention;
(c) the insurer's assessment of the risk of the further contravention happening;
(d) any action the insurer has taken, or proposes to take, to remove or minimise the risk of the further contravention happening;
(e) the timeframes for the insurer taking the actions mentioned in paragraph (b) and (d).
(5) If a licensed insurer gives the MAI commission a proposed remediation plan (including an amended proposed remediation plan), the commission must—
(a) approve the proposed plan; or
(b) require the insurer to amend the proposed plan.
(6) However, the MAI commission must not approve a proposed remediation plan unless the proposed plan—
(a) complies with subsection (4); and
(b) identifies appropriate actions and timeframes for responding to the risks identified in the proposed plan.
(7) If the MAI commission approves a proposed remediation plan, the commission must give the insurer a written notice stating—
(a) that the proposed plan has been approved; and
(b) that the insurer must comply with the approved remediation plan.
(8) If the MAI commission requires the licensed insurer to amend a proposed remediation plan, the commission must give the insurer a written notice stating—
(a) what amendments the commission requires the insurer to make to the proposed plan; and
(b) the day by which the insurer must submit the amended proposed remediation plan.