The National Insurance Brokers Association (NIBA) says it is disappointed not all Quality of Advice Review (QAR) proposals have been adopted, after the Federal Government last week finalised its response to the QAR report’s recommendations. 

As reported the Government is not taking up key QAR recommendations to broaden the definition of personal advice and establish a good advice duty. 

However Financial Services Minister Stephen Jones said a new class of “qualified” advisers will be created to provide “simple advice”. These advisers will be employees of general and life insurers, banks and super funds, and the financial institutions will be responsible for the advice provided. 

NIBA CEO Phil Kewin says the release of the government’s final response provides “certainty” to an industry that has grappled with significant regulatory upheaval since 2019. 

“To this end, we welcome the announcement. As premiums for small businesses and homeowners continue to increase and more and more Australians are exposed to natural disaster risks, the ability to access trusted, professional general insurance advice has never been more critical,” Mr Kewin told insuranceNEWS.com.au. 

“While the government has already announced their commitment to some reforms that will reduce the cost of providing risk advice, we are disappointed that they have decided not to proceed with the recommendations of the Quality of Advice Review in full and are currently assessing the impact of this on brokers and their clients. 

“We look forward to receiving more comprehensive details on these reforms and are committed to collaborating with the government to ensure that the proposed reforms effectively enhance the accessibility and affordability of general risk advice for all Australians.”                         

Insurers support the move to allow the industry to offer “simple advice” and the plan for a “modernised” bests interests duty regime to facilitate the provision of “scaled or limited scope” advice. 

“Modernising the advice regime will allow for better interactions between insurers and their customers, leading most importantly to greater financial resilience and overall well-being,” ICA CEO Andrew Hall said. 

Treasury has not yet launched exposure draft legislation for consultation and a number of financial services law specialists say details on how the reforms will be implemented will provide a better indication of what it means for the industry. 

McCabes Principal Mathew Kaley says of most significance to insurers is the Government’s decision not to proceed with the QAR recommendation to broaden the definition of personal advice. 

“That recommended change would have had a significant impact on the ways in which insurers provide advice to their customers and the duties that apply in that regard.” 

Law firm Minter Ellison says defining simple advice will be a challenge. 

“It will be interesting to see if the government takes a prescriptive or principles-based approach to this and what the role will be for [Australian Securities and Investments Commission] to provide clarity and certainty in this area.”

See ANALYSIS.