Insurance industry welcomes final report of Quality of Advice Review

“All Australians can benefit from timely, affordable, and accessible financial advice,” said CALI CEO Christine Cupitt. 

“The life insurance industry stands ready to work with the government on significant reforms to ensure consumers can get the right advice when they need it, including advice about their life insurance needs.”

NIBA CEO Philip Kewin said there had been “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,” Kewin said.

“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.”

Quality of Advice Review’s key components

Some of the review’s key components focused on the following:

Retaining commissions on general insurance products;
Disclosing commissions and obtaining informed client consent before receiving the commission;
Personal advice from brokers and agents or employees of insurers;
Expanding the definition of personal advice 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; and
Introducing a new good advice duty, replacing the existing best interest duty.

On banning broker commissions, the report said: “Despite their shortcomings, there is a very real risk that banning insurance commissions would mean that fewer consumers would receive advice about insurance and that fewer people would have the insurance cover they need.”