The National Insurance Brokers Association (NIBA) has urged the Financial System Inquiry to avoid saddling the broking sector with tough regulations developed to address shortcomings in other areas of the financial services industry.

In its submission on the inquiry’s interim report, the association calls for a clear distinction between insurance brokers and financial advisers.

CEO Dallas Booth says he is suspicious of references to “the industry”, because the financial services industry comprises several key sectors such as capital markets, wealth management, banking, payment services and risk insurance.

“We’ve tried to make the point that each of these sectors is different and performs very different functions,” he told insuranceNEWS.com.au. “The products and services are different, and the goals and objectives are different, so they shouldn’t be regulated under the same banner.

“Where there are problems to be addressed within the financial system, the solutions to these issues don’t necessarily apply across the whole system.”

NIBA is concerned about the use of “financial adviser” as a “catch-all term” that includes insurance advisers “when discussing reform that… is only needed in the financial planning space”.

Mr Booth says previous reviews have lacked understanding of the insurance industry, and he calls for a clear distinction between general and life insurance advisers and financial and investment advisers.

“Despite the parliamentary committee report that led to the Future of Financial Advice package looking almost exclusively at financial planners and investment advisers, insurance brokers were initially swept up in [it], despite there being no concerns identified with their performance.

“Hopefully this time around we will be able to explain the characteristics that make our industry different from other parts of financial services.”

The inquiry is scheduled to deliver its final report to the Federal Government in November.