The industry is preparing for the next phase of advice reforms after legislation requiring brokers to seek commission consent when providing personal advice to retail clients finally passed yesterday.

Brokers say passage of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 is an important step in delivering quality, affordable financial advice. The bill implements the federal government’s first tranche of advice reforms.

“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 Review recommendations,” the National Insurance Brokers Association said.

NIBA says the reforms are “a critical aspect of our commitment to ensuring general risk advice is accessible and affordable for all Australians”.

The association says over the coming year it will work closely with members to support them in meeting the legislation’s requirements.

“Our focus will be on ensuring our members are well-equipped to adapt to the new requirements, thereby continuing to provide high-quality advice and services to their clients,” NIBA said.

“[Our] members are already required to disclose commissions under the 2022 Insurance Brokers Code of Practice.”

Insurers are also preparing for the next phase.

“We look forward to participating in consultation on phase two of the advice reforms, which provides the opportunity to address unmet demand for financial advice from individuals with less complex financial circumstances,” an Insurance Council of Australia spokesperson said.

Financial Services Minister Stephen Jones says the legislation passed in parliament yesterday will strengthen transparency and protections for consumers who receive personal advice about insurance products. He says the second tranche of reforms will further increase access and affordability of financial advice and will be developed over the second half of the 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.”

Under the government’s reform plan, insurers will be allowed to provide “simple” advice. At present they are only permitted to offer general advice, which does not cover personal needs and circumstances. 

The bill passed yesterday after draft wording errors were fixed that would have accidentally led to a commission ban for brokers and intermediaries operating on a general advice model. 

The government also made an amendment to clarify that people can use their superannuation accounts to pay for personal financial advice about super from an independent financial adviser. The amendment came after industry stakeholders aired concerns at a Senate hearing last month and Coalition senators threatened not to back the bill.

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