The first Quality of Advice Review legislation introduced to parliament

The Bill relates to what is commonly referred to as Tranche 1 of the “Delivering better financial outcomes” package. This delivers on a number of recommendations from the Quality of Advice Review. 

The first Bill in relation to the Quality of Advice review has hit parliament. 

The Bill relates to what is commonly referred to as Tranche 1 of the “Delivering better financial outcomes” package. This delivers on a number of recommendations from the Quality of Advice Review. 

Of particular note to members are recommendations 13.7 and 13.9 in relation to disclosure and consent requirements for life insurance, general insurance and consumer credit insurance commissions. 

This follows the recommendation that general insurance commissions be retained, provided there is disclosure of the commission to be received and informed consent from the client.  

In short, the bill outlines: 

• Where a broker has or expects to provide personal advice to a Retail Client. The broker must obtain the client's informed consent prior to receiving commission.  

• The commission must be disclosed in the form of percentage range. 

• Consent does not need to be provided in writing, however there must be a written record of the consent i.e. a client declaration or a written record of verbal exchange.  

• Consent is not required for a renewal provided the original consent included consent to receive commission for subsequent renewals and the percentage of commission is within the range the client previously consented to. 

• If a business is sold, and client consent has been provided prior to the sale, the consent is carried over to the new broker provided the commission remains within the terms consented to by the client. 

It is intended that the legislation will become effective 12 months after the Bill gains Royal Assent.