The Federal Government has introduced the Simpler Regulatory System package to Parliament in a bid to have it passed during the winter session so it can take effect for the 2006/07 financial reporting year.

Parliamentary Secretary to the Treasurer Chris Pearce says the package, which includes the Corporations Legislation Amendment (Simpler Regulatory System) Bill and supporting bills, will reduce red tape for businesses.

The proposed legislation covers financial services regulation, company reporting obligations, auditor independence, corporate governance, fund-raising, takeovers and compliance.

Only some of the recommendations will affect general insurers, including changes to cross-endorsement arrangements, new standardised online reporting for notifying the Australian Securities and Investments Commission (ASIC) of in-use notices, ongoing review of Policy Statement 146, and the alignment of breach reporting periods for the Australian Prudential Regulation Authority (APRA) and ASIC.

The Insurance Council of Australia (ICA) strongly supports further work to make the regulation of financial services more effective. CEO Kerrie Kelly says ICA looks forward to ongoing consultation on issues arising from the definitions of personal and general advice.

National Insurance Brokers Association (NIBA) consultant John Hanks told Sunrise Exchange News the proposed legislation is welcomed by NIBA, but there are only a few areas that directly affect general insurance brokers.

Mr Hanks says the new cross‑endorsement arrangements will be amended so that licensees are only jointly responsible for the conduct of their authorised representatives where those representatives provide financial services in relation to the same class of insurance.

“The new cross‑endorsement of authorised representatives is useful for insurance brokers. The narrowing of these arrangements offers brokers clarity as to which licensees are responsible.”

An important change for financial advisers is that they will not have to provide a full-length statement of advice (SOA) for client investments under $15,000.

Mr Hanks says insurance brokers have been exempt from this for some time.

“Insurance brokers no longer have to provide SOAs when dealing with general insurance products, but they are required to make commission disclosures and any possible disclosures relating to a conflict of interest.”

In relation to the contentious sales recommendation, the Government will continue to engage with the industry. Mr Pearce says the proposal was that in some situations financial service providers may provide sales recommendations not considered to be financial advice.

“While there was general support for the need to address issues that arise as a result of the definition of financial advice, the proposal was not broadly supported,” he said.

Mr Hanks says NIBA is still engaged with Treasury on this issue.