The Federal Government has killed any hope of brokers getting relief for disclosure requirements in Financial Service Guides under the Financial Services Reform Act.

National Insurance Brokers Association (NIBA) CEO Noel Pettersen says Ross Cameron, the Parliamentary Secretary to the Treasurer, told NIBA board members at a meeting in February that he didn’t think it was possible to make the changes.

Mr Cameron reportedly said he came to the decision after long discussions with political colleagues, including Treasurer Peter Costello.

And he was reported as saying the Government wasn’t prepared to put forward a legislative change “simply to have it defeated in the Senate”.

It was a different story when Joe Hockey was Minister for Financial Services and Regulation. He indicated in February 2000 that no dollar amount or percentage amount disclosure would be required in a financial services guide because it is only when a specific product is sold that commission is calculated and paid to the service provider. In addition, the client does not pay the commission directly; it’s paid by the product issuer.

Mr Pettersen says the NIBA case was based around that original promise and the question: “What’s the point of disclosure that goes past what’s necessary for a retail insurance buyer to make a reasonable decision?”

“Bureaucratic and burdensome are two words that spring to mind,” he said.

Mr Pettersen says Mr Cameron admitted the requirements weren’t in line with what Mr Hockey endorsed but said there was nothing he could do except apologise for the fact that brokers had been misled.

The NIBA chief reminded brokers the only commission or remuneration that had to be disclosed was that attributed to the financial service.

“Where there is no causal connection between the benefit received from the insurer and the provision of financial services, the benefit does not need to be disclosed.”

“For example, payments by insurers to brokers for claims-handling services may not need to be disclosed in the financial services guide (FSG).”

Mr Pettersen says brokers preparing FSGs will need to follow the requirements for commission disclosure as detailed in ASIC Policy Statement 175.

“NIBA has prepared an online example of an FSG suitable for small insurance brokers and that example is available on the NIBA website,” he said.