The insurance industry is facing major difficulties and potential penalties in light of ASIC’s new name registration requirements which make white labelling a no-no, says a senior solicitor.
Jaime Lumsden Kelly of The Fold Legal said the issue was brought to her attention during the negotiation of the transfer of a name from one party to her client, and it has since started to arise with other clients.
White labelling involves permitting one business to use the name of another in a commercial arrangement similar to branding; something that Lumsden Kelly said is not uncommon in the insurance industry, when it is used for example in outsourcing call centres.
“You get people lending their name to brand products that are being distributed by other people.”
The new requirements however, mean that you must register a business name on ASIC’s register, and only one person is able to register that name.
“The situation [now] is that somebody may be seen to be trading under that name so there is an obligation for them to be registered under that name – but they can’t, because only one person can,” said Lumsden Kelly. “This is where we run into problems. It seems to be designed without looking at industry practice.”
Businesses will face penalties and fines in the case of failure to register, she said.
Currently, only businesses with single arrangements are able to side-step the issue by registering as an unincorporated joint venture, which is basically a quasi-partnership.
“It’s not ideal, but it gets the name on the register,” Lumsden Kelly said. “It’s a bigger problem when you’ve got a multiple arrangement. There’s literally no way to register these.”
The Fold Legal raised the issue with ASIC back in January and are still waiting to hear back. Lumsden Kelly wants to see the requirements amended to allow the flexibility to accommodate what the industry is doing in practice.
“These are commercial arrangements, there is money changing hands – it’s legitimate,” she said. “It’s by agreement: that’s what’s missing [from the requirements].”