The Financial Systems Inquiry (FSI), life insurance reforms and the question of professionalism within the financial services sector are among the leading issues facing brokers this year.
NIBA CEO Dallas Booth has offered an update on the regulatory work currently being undertaken by NIBA in relation to the issues that have the potential to affect Australian brokers.
The government’s general agreement to recommendations posited by the FSI is likely to affect new legal obligations on manufacturers and distributors of financial products.
ASIC is also likely to be given authority to intervene in financial markets where consumers appear to be incurring loss.
“From a NIBA and insurance broking perspective, the devil is always in the detail, and NIBA will be closely watching the preparation of draft legislation in order to ensure there are no unintended consequences for brokers,” Booth says.
Regarding professionalism standards within financial services, Booth says that it is unclear whether the government’s intention to develop legislative amendments to raise standards will be applicable to all financial advisers, including insurance brokers.
“NIBA is taking steps to clarity this matter and will update members accordingly,” Booth says.
The government intends to proceed with reforms to improve the quality of advice provided in relation to life insurance. The reforms will affect commission payable by up to 60%, starting 1 July 2018.
Booth says that NIBA will watch the reforms closely in order to keep members informed as developments progress.
Further to these issues, NIBA has also been investigating the potential effect that a user-pays funding model for ASIC may affect brokers, following the recommendation by the FSI.
The Assistant Treasurer released a consultation paper in August regarding ASIC’s funding and resourcing, and NIBA has since provided Federal Treasury with a submission in response.
“NIBA’s concern is to ensure that if this proposal goes ahead, funding should be shared according to the level of regulatory activity in the various sectors of financial services,” Booth says.
“In other words, the sectors that require and receive the greatest level of regulatory activity should be the sectors that contribute the bulk of ASIC funding in the future.”
Other matters currently being reviewed by NIBA include the suggestions put forward by the Northern Australia Insurance Premiums Taskforce, Federal Government assistance for farmers and the ASIC capability review.
Read the full blog post from Dallas Booth here.