NIBA Member Update: Disclosure of Lack of Independence

The Corporations Act currently prevents insurance brokers from using the terms “independent”, “unbiased” or “impartial” unless they can fit within an exemption. Most insurance brokers will not be exempt because they receive commissions or remuneration or benefits from insurers that are not rebated in full to the client.

From 1 July 2021, anyone providing personal advice to retail clients must also provide a new lack of independence notice in their Financial Services Guides (FSG) or Supplementary FSG’s (or time critical oral notices). The notice must be given before or at the time the personal advice service is provided on or after 1 July 2021 to existing and new clients. Significant penalties apply for a breach.

ASIC has updated ASIC Regulatory Guide 175 Licensing: Financial product advisers—Conduct and disclosure to add RG 175.127–RG 175.134 to reflect the new requirement for a lack of independence disclosure statement in a Financial Services Guide, and has also provided an example form of notice of lack of independence.

NIBA members need to update their FSGs and/or provide an SFSG and time critical notices to include the new notice so that when they provide any personal advice to a retail client on or after 1 July 2021 the client receives the new notice.

Detailed information about the new requirement and a suggested notice advising Lack of Independence can be downloaded below.

Please ensure your Financial Services Guide or any Supplementary Financial Services Guide are amended to include the new Notice of Lack of Independence as from 1 July 2021.