Complying with the Financial Services Reform Act (FSRA) which came into affect seven months ago is onerous and costs the industry tens of millions of dollars, according to brokers at an open forum during the National Insurance Brokers Association (NIBA) Convention in Perth.

Australian Securities and Investments Commission (ASIC) Executive Director of FSR Ian Johnston copped some sticky questions regarding the industry’s compliance requirements and what the regulator will be doing to fix “obvious inefficiencies” with the legislation.  

Asked what he thinks is working with the legislation and what isn’t, he said ASIC is generally very happy with how the industry has responded to the FSRA – but the issues of disclosure and client paperwork “may need some work”.

“We will work with the industry on paperwork to come up with a solution, but I can safely say that the likelihood of brokers ever being exempt from the legislation just won’t happen.”  

Panellist and NIBA board member Alan Bishop said product disclosure statements and statements of advice involve unnecessary duplication and clients are “fed up with the paperwork”.

Vero CEO Duncan West said although FSRA “appears to have some real benefits in terms of consumer protection and industry professionalism”, compliance costs have cost Vero’s parent company Promina tens of millions of dollars.

NIBA consultant John Hanks says another issue with FSRA compliance is “never-ending” costs. “There are just so many inconsistencies.”