Quality of Advice Review recommends broker commissions be retained
The long-awaited final report on the Quality of Advice Review was released earlier today.
Philip Kewin, NIBA CEO said “While we are still to digest the full 267 page report, we can see there are some very positive observations and pragmatic recommendations in relation to insurance and insurance brokers.
“The reviewer Michelle Levy acknowledges the important role of insurance in the community and the role of the broker in benefiting both the client and insurer. Importantly, commissions have been retained in order to ensure clients still have access to affordable advice from brokers.”
“We believe the expansion of the definition of Personal Advice, and commission disclosure required by those providing advice, will give more clarity and certainty for clients and create a level playing field, irrespective of whether they access their advice via a broker, agent or directly from an insurer”
Some of the key components include:
- Commissions be retained on General Insurance products
- Commissions must be disclosed and informed client consent be obtained prior to them being received:
a) For retail clients where Personal Advice is provided
b) Disclosure can be in percentage terms and within the range depending on the product
c) Consent is not required upon renewal. - Applies to Personal Advice from brokers as well as agents or employees of insurers
- The definition of Personal Advice be expanded to include any advice given where the provider holds any information about the client’s financial situation or one or more of their objectives or needs
- The introduction of a new Good Advice Duty which replace the existing Best Interest Duty.
The Quality of Advice Review is the second review into the financial services industry which has found no evidence of widespread misconduct by insurance brokers.
A copy of the report is available at Quality of Advice Review Final Report (treasury.gov.au)
A further communication about the review will be issued to members shortly.