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Commission consent becomes law

Parliament last week passed the federal government’s first phase of advice reforms that include changes to insurance commission disclosures.

Brokers and intermediaries must disclose commission arrangements and obtain consent for them from retail clients who are likely to receive or are receiving personal advice about insurance products.

Financial Services Minister Stephen Jones says the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 will strengthen transparency and protection for consumers who receive personal advice about insurance.

He says the second tranche of reforms will further increase access and affordability of financial advice, and will be developed over the second half of the year.

“This includes the government’s commitment to reform statements of advice, modernise the best-interests duty and remove the safe harbour steps, and increase the provision of advice by financial institutions.”

Under the reform plan, insurers will be allowed to provide “simple” advice. At present they are only permitted to offer general advice, which does not cover personal needs and circumstances.

Insurers and brokers have welcomed the reforms’ progress.

“We look forward to participating in consultation on phase two of the advice reforms, which provides the opportunity to address unmet demand for financial advice from individuals with less complex financial circumstances,” an Insurance Council of Australia spokesperson said.

The National Insurance Brokers Association says passage of the bill last week is an important first step in delivering quality, affordable financial advice.

“We look forward to collaborating with the government and regulators on the implementation of these reforms and are eager to engage in the ongoing discussions surrounding the outstanding Quality of Advice Review recommendations,” NIBA said.