The National Insurance Brokers Association (NIBA) is reviewing the recommendations issued by the Quality of Advice review, with responses to a discussion paper due later this month.
The independent review established by the previous federal government after the Hayne royal commission wants to expand the definition of personal advice, have general advice no longer regulated as a financial service and remove the responsibility of “good” and the responsibility of providing “good advice”.
NIBA chief executive, Phil Kewin, says the review process for reforming financial services is welcome and the group is reviewing the proposals and assessing their impact on members and clients.
“The report shows that these recommendations are not only final, they are not finalised,” he told insuranceNEWS.com.au. “We look forward to continuing our partnership with the Treasury and independent auditor Michelle Levy and will be participating in discussions next month.”
Mr Levy has supported a policy-based approach which he says will remove complexity and cost and make counseling easier for consumers and providers.
“In my view this greater freedom can be achieved without creating the same risk of harm to consumers, who will be protected by the new duty to provide good advice and the many consumer protection measures already in place,” he says.
The Review of Financial Advice was inspired by Hayne’s research and examines the dynamics of various reforms that have been initiated to address issues in financial advisory services, rather than disrupt them.
The final report will include an examination of whether the exemption from the prohibition of conflicting payments should remain for insurance, but this issue was not discussed in the temporary information sheet, while information continues to be collected.
Law firm Allens Linklaters describes the current proposal as “sustainable” and says it would make the administration simpler and less complicated.
The proposal can mean any discussion or interaction between the client and their bank, super fund or insurance can be considered as personal advice and discussion if it includes ideas or suggestions that they want to influence the client.
“While on its own this proposal may have the effect of increasing control by expanding the meaning of personal counselling, it must be considered in light of other considerations that may limit the control of counsellors,” says Allens.
“The discussion paper suggests that the revised definition of personal advice would encourage providers to think they are giving personal advice when in doubt, which would be helpful to consumers.”
Under the proposal, providers of personal advice to retail clients must keep full records of the advice they provide and provide written advice to the client upon request. This may supersede the existing rules for issuing a statement of advice or a profile of advice.
The Financial Services Council said the long-term proposals offered a “clear solution” while the Self Managed Super Fund Association said it was “a breath of fresh air. But consumer groups issued a unanimous statement criticizing the proposals, particularly as they plan to reform the service.”
“These changes could restore consumer protection by 15 years,” said Choice CEO Alan Kirland. “It’s as if the banking royal commission has already been forgotten.”
NIBA says it will be providing a response to the consultation paper and has invited member responses by September 16. Treasury has asked for them to be sent by September 23, with a final report due on December 16.