General insurance brokers will still be able to receive commissions on insurance products and volume payments after being excluded from the Federal Government’s Future of Financial Advice (FOFA) reforms.

National Insurance Brokers Association (NIBA) legal adviser Mark Radford told insuranceNEWS.com.au it’s a good result for the general insurance industry.

“Insurance brokers can continue to receive commission and other forms of remuneration from insurers, including volume and profit share, on general insurance and life insurance,” he said.

The ban on soft dollar payments from product providers will also not apply to the general insurance industry.

However, insuranceNEWS.com.au has isolated one superannuation-related aspect that will restrict general insurance brokers’ ability to claim commissions (see following article, “No commissions for brokers selling to super funds”).

While the insurance industry has escaped the more severe proposals of FOFA, the Federal Government is still looking at whether to include brokers in its statutory “best interests” reforms.

This reform will require intermediaries “to act in the best interests of clients and give priority to the interests of the client above any other interests”.

Mr Radford says consultation on the formulation of the reform and discussion on whether it will apply to insurance brokers is continuing.

“Compliance will be measured according to what is reasonable in the circumstances in which the advice is provided,” he said.

“What is reasonable in the circumstances is commensurate and scalable to the client’s needs.

“This means that if the client’s needs indicate that only limited advice is necessary, the adviser is not obliged to provide holistic advice.”

Another FOFA proposal that will probably affect brokers will be a simplified form of advice to be called “scaled advice”.

This will enable the broker to talk to the client on just one specific topic of their needs with reduced paperwork and without the need to produce a full financial plan.

Mr Radford says NIBA will continue to consult with the Government on this proposal once more information becomes available.

Treasury is also looking at restricting the use of “financial planner/adviser”.

Mr Radford says the term “insurance broker” is ready covered in the Corporations Act.

“But NIBA will be looking at similar branding opportunities for the term in the same way financial planners are,” he said. “We will hold discussions with Treasury about restricting the use of the term insurance broker.”