Moves by the Federal Government to allow financial service providers to offer sales recommendations not considered to be financial advice are being vigorously resisted by the National Insurance Brokers Association (NIBA).

Late last year Parliamentary Secretary to the Treasurer Chris Pearce issued a paper on possible amendments to the Corporations Act, with some proposals directly related to financial services reform.

A submission by NIBA is generally in support of the proposals, because they aim to simplify and improve financial services regulation. However, NIBA and other associations have expressed concern about the sales recommendation proposal.

After meeting a NIBA delegation last week Mr Pearce said legislation will be developed, with only minor changes to the original statement, for all the proposals except the sales recommendation.

It is believed Mr Pearce will consider the sales recommendation proposal further. A conference is expected to be held soon at which interested parties will aim for a consensus position.

The proposal would allow insurance companies and their agents, apart from insurance brokers, to provide product advice to customers without having to meet the standard personal advice requirements.

NIBA CEO Noel Pettersen says the association opposes the proposal “because it doesn’t treat people offering similar services in a similar way”.

“Such an arrangement would place insurance brokers at a disadvantage to direct sellers of insurance, particularly in situations where the broker acts for an insurer and not the client.”

He says it would be more effective if all AFS licensees were able to agree with clients on the nature and extent (including limitations) of personal advice.

See also FINANCIAL SERVICES.