Government releases response to the Quality of Advice Review Final Report

The Federal Government has released details of their long-awaited response to the Quality of Advice Review Final Report. Assistant Treasurer and Minister for Financial Services Stephen Jones, announced a number of reforms that the government believes will address the high cost of advice, better protect consumers, bolster ethical standards and ensure Australians can access helpful information that could make a meaningful difference to their quality of life.  

While a number of recommendations do not directly impact general insurance brokers, a key outcome of the announcement is the acceptance of Recommendation 13.8, which recommended that general insurance commissions be retained with greater transparency and client consent. This is a significant win for insurance brokers and their clients and NIBA welcomes the Government’s support for this recommendation. 

NIBA CEO Philip Kewin said that “insurance brokers, through the implementation of the 2022 Insurance Brokers Code of Practice, have introduced measures to improve transparency and disclosure, and the Government’s response is fairly consistent with our approach.”  

NIBA President Gary Okely said, “in what has been a sustained hard market where accessibility and affordability of insurance has been under pressure, brokers have continued to play an important role in assisting their clients. Today’s announcement gives more surety around brokers ability to provide professional advice to their clients.” 

Implementation of the reforms 

The reforms will be progressed in three streams with legislation being developed over the coming year. 

Stream one – removing red tape that increases the cost of advice; 

Stream two – expanding access to retirement income advice; and 

Stream three – exploring new channels for advice. 

Stream one – removing onerous red tape that adds to the cost of advice with no benefit to consumers. 

• Statements of Advice will be replaced with a record of advice that is fit-for purpose. The government has indicated it will undertake consultation to determine the final design and requirements of the replacement document.
• Providers of advice will have greater flexibility around how they can comply with their Financial Services Guide obligations, including by making information publicly available on their website.
• General insurance commissions will be retained with disclosure and consumer consent.

Stream three – exploring new channels for advice. 

The government has announced it will undertake further consultation with industry and consumer stakeholders regarding the following recommendations: 

• Expanding the definition of personal advice so that all financial advice will be considered to be personal advice if, it is given to a client in a personal interaction or personalised communication by a provider of advice who has (or whose related body corporate has) information about the client’s financial situation or one or more of their objectives or needs.
• Removing the requirement to provide a general advice warning.
• Replacing the current Best Interest Duty with a duty to provide good advice.

A number of the recommendations that will be addressed during stream three will have a significant impact on brokers and the way they provide advice to their clients. NIBA will be working closely with government over the coming months to deliver a positive outcome for members. The government is expected to finalise the details of its Delivering Better Financial Outcomes package later this year. 

Members can view the government’s response to the recommendations on the Treasury website. A copy of the NIBA media release is also available.    

NIBA looks forward to working with government over the coming year to finalise the implementation details of these recommendations, as well as the outstanding recommendations that have yet to be addressed.