The National Insurance Brokers Association (NIBA) has rejected a suggestion to rename personal advice as financial advice, warning such a change may have reputational implications for the sector.

The Australian Law Reform Commission (ALRC) floated the idea in a first Interim Report released as part of a three-year review of financial services legislation and regulations.

NIBA says in a submission that the current terminology is clearly understand and the suggested change would not be appropriate in the insurance and risk advice context and is likely to cause confusion for consumers.

“Furthermore, given the issues that were identified during the royal commission and the resulting brand damage and loss of consumer trust that many in the financial services sector experienced, NIBA is concerned that the good reputation of the general insurance broking industry will be affected by such a general term,” it says.

NIBA supports changing the term general advice to one that more closely reflects the nature of the information being provided, while noting that the concepts of general and personal advice will be considered during the upcoming Treasury Quality of Advice review, which provides a more suitable forum.

The submission supports a review of the working relationship between drafters of legislation and those providing instructions on proposed policy reforms.

“Consideration of how to better record the policy objectives as conceived by the legislature at the time, is in NIBA’s view crucial,” it says.

“A recent example of where issues have arisen in this regard is the complexity of legislative reform introduced following the royal commission, that has not resulted in the intended policy outcomes.”

NIBA also supports a proposed amendment to the wording of the obligation to act “efficiently, honestly and fairly”.

ALRC has suggested replacing the word “efficiently” with “professionally” and says providing unfair conduct examples could add clarity.