The Australian Securities and Investments Commission (ASIC) says it wants to regulate best-interests duty rather than let the financial services sector police itself.

A new regulatory guideline on the duty says general insurance workers should “conduct a reasonable investigation into the financial products that might achieve the objectives and meet the needs of the client”.

Staff will have to assess the information before recommending a product, explaining its features and ensuring clients understand the cost of providing it in a policy.

ASIC concedes the best-interests duty will result in compliance costs, including changes to IT systems, training for advice providers and additional record-keeping requirements.

“We consider this… is likely to be minimal because any additional training programs required as a result of our guidance can be rolled out at the same time as the training on the legal requirements,” the regulator says in its guidance document.

Insurance industry submissions on the draft guidelines last year said the rules would not have a significant impact on operations.

But financial services and legal sector submissions disagreed. An unnamed industry association estimated the cost to its members at $5-$40 million.

“One Australian financial services licensee indicated the cost of complying with the law and our guidance, including the need to obtain legal advice and to implement a training and education program for authorised representatives, will be at least $100,000,” ASIC says.

“We have carefully considered the different feedback from industry. On balance, we anticipate that the costs to industry of complying with our guidance will be minimal.”

General insurance staff must comply with the best-interests duty from July 1.