The Australian Securities and Investments Commission has released guidance on commission consent laws that take effect on July 10 next year.

The laws mean general insurance brokers that are providing, or likely to provide, personal advice to retail clients must obtain permission to be paid a commission.

The “informed consent” requirements also apply to life insurance and consumer credit insurance commissions.

Before a client can provide informed consent, the broker must disclose information including name of insurer, if known; rate of commission as a percentage of the premium; and frequency of payment.

The legislation requires this information to be presented in a clear, concise and effective manner.

“Clients are not considered to have had a ‘genuine and real opportunity’ to make an informed decision if the information is not clearly identifiable as information being disclosed ... to [help] them decide whether to be issued or sold the relevant insurance,” ASIC says.

“This is because such information would not prominently and clearly bring to the client’s attention the consent being sought.”

Consent must be sought again if the renewal benefit is higher than the benefit previously disclosed to the client, or if the broker proposes to increase the frequency of the payment.

Clients’ written consent or a written record of any verbal consent are accepted as proof of permission.

Click here for the updated Regulatory Guide 246, and here for the information sheet.