The Federal Government has finally responded to the Quality of Advice Review (QAR) recommendations, agreeing general and life insurance commissions will stay but holding back on other key proposals including expanding the definition of personal advice until it has consulted with stakeholders.

Brokers and life advisers have welcomed today’s announcement from Financial Services Minister Stephen Jones that commissions will remain exempt from the ban on conflicted remuneration.

National Insurance Brokers Association CEO Phil Kewin says the commissions decision “gives us the clarity that we need”.

“I would have been surprised if there was anything other than that, but you just never know,” Mr Kewin told insuranceNEWS.com.au.

“What the government is doing is reaffirming the fact that it supports the retention of commissions but provided that there is consent from the client and provided there are disclosure provisions as outlined in the Quality of Advice recommendations."

Financial services lawyer Michelle Levy, who led the review and submitted her final report in December, recommended keeping the commissions remuneration model but with the condition that a person who provides personal advice to a retail client in relation to a general insurance product must explain to their client that they will be paid a commission.

The same condition applies to life insurance commissions.

Mr Jones says the Albanese Government will adopt “in full or in principle” 14 of the 22 recommendations made by Ms Levy.

The 14 recommendations that will be adopted include also replacing the statement of advice with a fit-for-purpose advice record and clarifying that monetary or non-monetary benefits given by a client are not conflicted remuneration.

The Government has also accepted the proposal to remove the Safe Harbour steps from the Best Interests Duty requirement and it will consult to determine implementation details and the implications of adopting the “remaining parts” of the recommendation to replace the Best Duty requirement with a new “statutory Best Interests” obligation.

Ms Levy in her final report says the new statutory duty will apply only to financial advisers.

However the Government says it is accepting in principle "part of” the recommendation.

Mr Jones says his approach is “to sort between the urgent and the important”.

“Not everything is a burning deck… which is not to say that we ignore the important,” he said today in an address to the Association of Superannuation Funds of Australia.

“We are also not ruling out any recommendations and will finalise our position on the remaining recommendations before the end of the year.”

He says the government has grouped the QAR recommendations into three streams. Proposals that are not as “urgent” fall into Stream Three’s Exploring New Channels for Advice.

“The final stream will examine the role for other institutions – banks and insurers – in providing more information and advice,” Mr Jones said, referring to Stream Three. “In terms of priority, I believe it is more urgent that we fix the problems for financial advisers.”

Included also in the final stream are proposals relating to broadening the definition of personal advice, removing the general advice warning and allowing non-relevant providers to provide personal advice.

The Council of Australian Life Insurers (CALI) has welcomed the Government’s QAR response but says it is important that Government legislation also allows life insurers to provide limited advice to Australians directly when they ask for it.

“This announcement is a good start but more needs to be done to help solve the unmet financial advice need for working Australians, not just those people approaching retirement,” CEO Christine Cupitt.

“We must address the growing problem of underinsurance that is leaving people unprotected when times get tough.”

Radford Lawyers Principal Solicitor Mark Radford says the Government “is not clear” in relation to its plan to introduce standardised consumer consent requirements for life, general and consumer credit insurance commissions.

“The Government is not clear on what the consent requirements will be and this is not surprising given there were issues requiring clarification in the final Quality of Advice report,” he said.

“Insurance brokers will need to consider in detail the proposed consent obligations to ensure they are practically workable.”