Legislation making brokers obtain consent for commissions has led some brokers to shift to a general advice model on less complex products such as home insurance – meaning consumers could miss out on critical guidance.

The obligations – recommended by Quality of Advice Review head Michelle Levy – took effect last July, requiring brokers providing personal advice to obtain informed consent from retail clients before being paid commissions for product sales.

However, brokers have previously argued commission is already disclosed to retail clients, and seeking consent adds time, complexity and cost to a stretched process. Some say it also risks making domestic products unviable, considering the limited income available. 

The National Insurance Brokers Association said last year the rules create duplication and are an example of “regulatory overreach”.

And today, NIBA president Nick Cook has confirmed brokers are assessing their business and advice models in light of the changes.

“We’ve got mature, sophisticated, sensible brokers who have said, ‘For these products, let’s say home, we’re just going to go to a general advice model,’ ” he told insuranceNEWS.com.au.

“These are not brokers that would take shortcuts. They’ve obviously thought about it and this is the course of action they are taking.”

Mr Cook says he is confident clients will always be informed of the change in approach but warns they could be disadvantaged because their circumstances will not be considered or options reviewed. 

“The role of a broker is to provide advice. This regulation has actually pushed brokers to review and reassess their business models.”

He has also reiterated NIBA’s concern that the legislation leads to duplication.

“[The commission] is already on the invoice. It’s already in different places, the financial services guide. To then ask the client for their confirmation in quite a clunky way… I think some brokers have weighed that up and moved to that GA model.”