Degree demand ‘may cost brokers $30 million’
Making a university degree the minimum education requirement for financial services providers could cost general insurance brokers $30 million, it is claimed.
National Insurance Brokers Association (NIBA) CEO Dallas Booth says there is “no reason to mandate a bachelor degree as a minimum education requirement for insurance broking. NIBA firmly believes the current framework for the education and training of insurance brokers is relevant and appropriate.”
In a response to a Treasury consultation paper on educational and professional standards in financial services, Mr Booth says complying could cost an estimated $10,000 per degree for more than 3500 NIBA College members.
If a Diploma of Insurance Broking becomes the minimum qualification, the resulting cost will be $4.8 million, he says. About 1600 members would need to complete block two of the NIBA College diploma course, which costs $3000.
Mr Booth says current educational standards are already met by NIBA College and the Australian and New Zealand Institute of Insurance and Finance.
NIBA believes at least two-thirds of brokers in Australia are members of NIBA College.
Educational and professional standards could be better raised through more effective staff training requirements among financial services licensees, regulated by the Australian Securities and Investments Commission (ASIC), according to Mr Booth.
NIBA intends to seek ASIC approval for the next revision of the Insurance Brokers Code of Practice, because the regulator can approve codes of conduct under the Corporations Act.
Mr Booth says NIBA is “very concerned” that owners and managers of brokerages will be less likely to offer personal advice and support on insurance if it becomes mandatory to hold a degree.
NIBA opposes any proposal for it to be regulated by the Professional Standards Councils (PSC).
It has “taken a considered decision to not seek PSC approval for a professional standards scheme, on the basis the costs associated with implementing such a scheme would outweigh the benefits”.
NIBA also opposes a proposal to form a finance professionals education council.
Mr Booth says brokers again risk being caught in a “one size fits all” approach to industry regulation.
“The proposed changes are clearly aimed at addressing the real issues associated with financial advisers and planners involved in the investment and superannuation industries, but the recommendations appear to catch risk insurance brokers under the broad term financial adviser, where no equivalent problems have been identified.”