The National Insurance Brokers Association (NIBA) is working with Treasury to rectify wording errors in a bill that would have inadvertently banned commissions for general advice.

The bill was tabled in Parliament last month containing changes to the Corporations Act 2001 requiring brokers to disclose and obtain commission consent if providing or likely to provide personal advice to retail clients.

But the wording of the legislation has created unintended consequences: the new provision, section 963BB, was drafted in a way that meant general insurance commissions would no longer be exempt from the ban on conflicted remuneration. 

“In the proposed drafting, the current conflicted remuneration exemption for general insurance commissions had inadvertently been removed except where the broker was providing personal advice and had met the commission disclosure and consent obligations,” NIBA said.

“NIBA is in contact with Treasury to ensure that the amended legislation accurately reflects the intent and does not result in further unintended consequences for members.

“The bill is currently under review by the Senate Economics Legislation Committee. NIBA will be providing a submission to the committee, highlighting the need to address the drafting error and supporting the commission disclosure and consent obligations as they apply to personal advice.”

Financial Services Minister Stephen Jones says it remains the Government’s intention to retain an insurance exemption from the ban on conflicted remuneration, after industry stakeholders flagged the errors to Treasury.

“The intent is to maintain the current exemptions for conflicted remuneration on insurance matters, except that advisers will now need to seek their client’s consent before accepting commissions if the adviser provided personal advice,” Mr Jones said.

The Treasury Laws Amendment Bill was first tabled before the House of Representatives, and the Senate has referred the bill’s provisions to its Economics Legislation Committee for inquiry and report by June 20.

The closing date for submissions is April 26. Click here for details.