The Albanese Government introduced a bill in parliament today to implement the first phase of its response to the Quality of Advice Review final report, after consultations on proposed draft legislation wrapped up last December. 

Key measures in the bill before the House of Representatives include the introduction of disclosure and consent requirements for general and life insurance commissions as well as consumer credit insurance commissions. 

Assistant Minister for Competition, Charities and Treasury Andrew Leigh, who moved for a second reading of the bill, says the proposed legislation will “support improved access to affordable financial advice for millions of Australians by cutting onerous red tape that adds to the cost of advice with no benefit to consumers”. 

An explanatory memorandum for the Delivering Better Financial Outcomes Bill explains in detail how the commission disclosure and consent requirements will apply to general insurance. 

Consent is required if a broker provides or is likely to provide personal advice to a retail client about general insurance. The consent must be obtained before a commission is accepted and if the client does not give their permission, then the broker can agree to provide the advice for a fee paid by the client, or they can decline to provide the advice. 

The commission must be disclosed in the form of a percentage range. 

Consent does not need to be provided in writing. However, there must be a written record of the consent, that is, a client declaration or a written record of a verbal exchange. 

The memorandum says consent is not required for a renewal if the broker has informed the client before the first commission was received that it would be paid a commission every time the policy is renewed and that the rate of the commission upon renewal is equal to or less than that disclosed to the client before the original consent was given. 

“New consent would be required without such an explanation, or if the rate of the commission increases above what was originally disclosed. This approach ensures transparency to the client where there is a change to the provider’s interests that hasn’t already been previously disclosed and mitigates the risk to clients described above,” the memorandum says. 

If a business is sold and client consent has been provided prior to the sale, the consent is carried over to the new broker provided the commission remains within the terms consented to by the client.

Click here for the bill and explanatory memorandum.