NIBA welcomes passing of the first tranche of Quality of Advice Review legislation

The Delivering Better Financial Outcomes Bill has successfully passed through parliament.

The Delivering Better Financial Outcomes Bill has successfully passed through parliament, marking a significant step towards the implementation of the Quality of Advice Review recommendations.  

This legislation aims to enhance transparency and accountability within the financial services industry, promoting the provision of quality, accessible, and affordable financial advice for all Australians.  

The Bill introduces new requirements for risk advisors to disclose the rate of commission and obtain the client’s consent prior to receiving any commission from the product issuer. Under the new legislation where a broker has or expects to provide personal advice to a Retail Client (as defined in the Corporations Act) the broker must obtain the client's informed consent prior to receiving commission. The commission must be disclosed in the form of a percentage range. The clients’ consent does not need to be provided in writing. However, there must be a written record of the consent, i.e. a written record of a verbal exchange.   

  Brokers will not be required to gain the clients’ consent at each 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.   

This obligation will commence 12 months after the Bill gains Royal Assent, likely in mid-July 2025 and apply to new retail policies placed after the implementation date. Brokers will still be required to disclose commissions to all Retail Clients in accordance with the 2022 Insurance Brokers Code of Practice.    

NIBA has welcomed the passage of the Bill.  

“This Bill is an important first step in delivering quality affordable financial advice”, said NIBA CEO Richard Klipin. “We will work closely with our members over the coming 12-months to support them in implementing these reforms so brokers can continue to provide high-quality advice and services to their clients.”   

This legislation is the first of three tranches, which will implement the recommendations of the Quality of Advice Review. Tranche two, which will be developed over the second half of this year. “This includes the government’s commitment to reform statements of advice, modernise the best interests duty and remove the safe harbour steps, and increase the provision of advice by financial institutions,” said Assistant Treasurer Stephen Jones in a Media Statement shortly after the Bill was passed.  

“We look forward to collaborating with the government and regulators on the implementation of these reforms and are eager to engage in the ongoing discussions surrounding the outstanding Quality of Advice recommendation, which remains a critical aspect of our commitment to ensuring general risk advice is accessible and affordable for all Australians,” Klipin concluded.