The review of financial advice, including broker commissions, is set to start this year, with submissions due tomorrow on the draft terms of reference.

Consumer Action Law Centre released its submission today, saying the review is a “critical opportunity to end harmful conflicted remuneration in financial advice and insurance for good”.

The National Insurance Brokers Association is consulting members on its submission but has previously argued that broker commissions work well for clients, brokers and insurers and that replacing them with a fee-based model could reduce access to advice.

The Quality of Advice review was recommended by the Hayne royal commission to examine the success of changes already introduced in financial services and whether other reforms are needed.

The review was triggered by financial advice issues outside general insurance, but the inquiry’s mandate extends to issues critical to brokers.

The draft terms of reference confirm the review will examine the remaining exemptions to the ban on conflicted remuneration in life and general insurance, and it will look again at “financial product advice”, “general advice” and “personal advice”.

Life insurance remuneration reforms and the impact of those on coverage levels will be under scrutiny, while other issues include the clarity and availability of documents and disclosures, consent arrangements and the designation of sophisticated investors and wholesale clients.

The wide-ranging proposed draft terms of reference extend to actions undertaken by the Australian Securities and Investments Commission and the role of financial services entities including professional associations.

Treasury says the year-long process will be led by an independent reviewer and supported by a secretariat based in the department, with a report expected to be delivered to Government by December 16.

“There will be opportunities to comment on substantive policy issues once the review is underway,” Treasury says.

Consumer Action Law Centre argues today that the royal commission’s findings on conflicted remuneration have been “forgotten”.

“This review is supposed to be focused on ending conflicted remuneration in insurance and financial advice, which is the root cause of many of the problems uncovered by the Financial Services Royal Commission,” Senior Policy Officer Cat Newton said.

“Inexplicably, the Draft Terms of Reference for the Advice Review says nothing about these issues and the Treasury’s landing page makes no reference to ‘conflicted remuneration’ or even ‘insurance’.

“The Advice Review cannot be said to be meaningfully implementing the royal commission recommendations without considering Commissioner Hayne’s commentary on the conflicts between interest and duty in financial services.”

More details are available here.