The Australian Prudential Regulation Authority (APRA) today announced that Justice Dowsett of the Federal Court in Brisbane yesterday made declarations and orders in relation to Barclay MIS, which had been providing unregulated insurance to landlords contrary to the requirements of the Insurance Act 1973 (the Act).
Barclay MIS is a group of companies operating as Barclay MIS Group Pty Ltd and Barclay Protection Plan in Australian states and territories.
The Court made a declaration that Barclay MIS had, by carrying on since 1999 the business of entering into agreements under and performing the Barclay Rent Guarantee Plan , the Barclay Damages Guarantee Plan and the Barclay Total Guarantee Plan , conducted insurance business as that term is defined in section 3(1) of the Act.
The Court also made an order that Barclay MIS pay half of APRAs costs in the proceedings, as well as declarations and orders in favour of the Australian Securities & Investments Commission (ASIC).
The case was commenced as a result of an application by Barclay MIS for declaratory relief against APRA in relation to the above three plans, as well as one other plan and two proposed plans.
Dr Darryl Roberts, APRAs Head of Enforcement, said the application followed inquiries by APRA and ASIC into Barclay MIS, and APRAs conclusion that Barclay MIS was an unauthorised insurer.
The conduct of an insurance business without the required authorisation puts consumers at risk and can attract significant penalties under the Act, he said.
Dr Roberts claimed that insurance providers that do not comply with the provisions of the Act and APRAs regulatory requirements are in danger of being undercapitalised and are, therefore, potentially unable to pay all valid claims in full.
The Court also found, however, that three other plans offered or proposed by Barclay MIS were not insurance business within the meaning of the Act.
At the time of the hearing, Barclay MIS gave an undertaking to the Court to stop selling the three types of plans which have since been declared to be insurance business. As a result of the declaration, Barclay MIS will not resume their sale.
Insurance providers should keep in mind that full compliance with the Act is in their interests and in the interests of their clients, Dr Roberts added.
