The Albanese Government is working to resolve “as soon as possible” wordings in a bill before the House of Representatives that could mean the end of insurance commissions for brokers that offer general advice.

The bill was introduced in Parliament last month and adds a new provision to the Corporations Act 2001 requiring commission disclosure and consent for brokers providing or likely to provide personal advice to retail clients.

Financial Services Minister Stephen Jones says it remains the Government’s intention to retain an insurance exemption from the ban on conflicted remuneration. But the way section 963BB of the bill is currently worded means brokers and other intermediaries that operate on a general advice model will no longer be exempt from the ban on conflicted remuneration, meaning they will be in breach of laws if they are paid commissions.

“Stakeholders have helped to identify a concern that the drafting of the bill before Parliament does not meet the Government’s full policy intent,” Mr Jones said. “The intent is to maintain the current exemptions for conflicted remuneration on insurance matters, except that advisers will now need to seek their client’s consent before accepting commissions if the adviser provided personal advice.”

He says the “unintended consequences will be addressed so that the law reflects the Government's position. We will seek to resolve this as soon as possible in line with our priority to deliver the Government’s comprehensive financial advice reform package.”

The Insurance Council of Australia (ICA) says 963BB has been drafted in a way that “unintentionally removes the operation of the conflicted remuneration exemptions for persons not providing personal advice”.

“We understand that it is not the intention of the drafting to remove the current exemption for conflicted remuneration for general advice. ICA has raised this issue with the Treasury,” a spokesperson told insuranceNEWS.com.au.

“ICA understands that options are being explored to resolve it.”

National Insurance Brokers Association (NIBA) CEO Phil Kewin told insuranceNEWS.com.au that while increasingly brokers provide personal advice to clients, there are some circumstances in which they still provide general advice. “We understand it is an unintended drafting error and moves are afoot to address it. NIBA will participate where necessary to assist in that process.”

The bill implements the first phase of the Government’s response to the Quality of Advice Review final report, after consultations on proposed draft legislation wrapped up last December.

Reviewer Michelle Levy proposed retaining the commissions model and added client consent as a guardrail to help consumers make “informed” choices on remuneration arrangements if they are getting personal advice.