What does Government response to FSI mean for brokers?

by Dallas Booth     21-Oct-2015


Government response to FSI

 

The Federal Government announced its detailed response to the Financial System Inquiry report on 20 October 2015.

The Government’s response, like the FSI Report, is extensive and quite detailed. Overall, the Government has decided to accept almost all the recommendations from David Murray and the FSI panel.

The Government has also committed to consult extensively on many of the proposed reforms, which will be quite technical when it comes to implementation.

 

"There is no doubt that anyone giving advice on life insurance, savings and investment products will need to take steps to meet the new requirements for minimum levels of professional education and conduct."

Some of the key decisions announced by the Government include:

  • The Government will implement recommendations which will require product manufacturers (insurers) and distributors (brokers and others) to take responsibility for the design of those products, and the impact the products will have on the target consumers. The Government has committed to undertake detailed consultation on the development of these new legal principles.

  • The Government has accept the recommendation to give ASIC greater powers to intervene in financial services markets. Steps will also be taken to impose greater levels of accountability and transparency on ASIC and other key financial sector regulators.

  • The Government wants “financial advisers” to hold a degree, pass an exam, undertake continuous professional development, subscribe to a code of ethics, and undertake a professional year before they can advise clients. NIBA is taking steps to clarify whether these requirements will apply to general insurance brokers.

  • The Government has decided to implement the life insurance reforms announced by the former Assistant Treasurer in June 2015. This will include changes to life insurance commissions, and a number of other requirements. These changes will take effect from 1 July 2016.

As always, the devil will be in the detail, especially in relation to the proposed new obligations on product manufacturers and distributors.

There is no doubt, though, that anyone giving advice on life insurance, savings and investment products will need to take steps to meet the new requirements for minimum levels of professional education, CPD and professional conduct. The Government has undertaken to consult fully in relation to the implementation of these reforms. Sufficient time will need to be allowed to ensure advisers will be able to meet the new standards.

NIBA will continue to examine the Government’s response in detail, and will continue to advice Members as further developments occur.

 

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