Brokers welcome proposed ‘informed consent’ commission requirement
Proposed advice reforms requiring general insurance risk advisers to obtain “informed consent” from retail clients giving them the go-ahead to receive a commission for services provided have been welcomed by brokers.
As reported this week, Treasury released draft legislation for consultation as the Albanese Government proceeds with its response to recommendations made by the Quality of Advice Review (QAR) in its final report last year.
Included in the package of law amendments released on Tuesday is the introduction of new standardised consent requirements for general, life and consumer credit insurance commissions.
The proposed measure means a broker or intermediary who provides personal advice to retail clients must have the client’s “informed” consent before accepting a commission or any other monetary benefit.
To help the client make an “informed” decision, brokers must provide them with a range of information such as the rate of monetary benefit, name of the insurer and why consent is required.
With monetary benefit, the draft legislation says the rate can be expressed as a percentage range of the premium.
The consent must be obtained before the issue or sale of the insurance product and the broker or licensee must have the client’s written consent or a copy of the written consent. If the consent is not obtained in writing, then a written record of the consent will suffice.
“We welcome the release of the draft legislation and look forward to working with government on these important reforms to remove regulatory red-tape and improve the affordability and accessibility of general risk advice,” National Insurance Brokers Association (NIBA) CEO Phil Kewin said.
NIBA says the “informed consent” requirements allow brokers “greater flexibility” when they get approval from clients.
Other pre-consultation concerns flagged by NIBA have also been taken into account.
NIBA says the draft laws do not require brokers to obtain the client’s consent at each renewal provided the broker informed the client they would receive commission on each occasion that the policy is renewed prior to obtaining the client's original consent.
“It is important to note that this is not the final version of legislation that will go before Parliament some time next year. NIBA will be providing feedback on the draft legislation, prior to the consultation closing in early December,” NIBA said.
Closing date for submissions is December 6.
Click here for the exposure draft and other materials.