This week (beginning July 10), informed consent obligations for insurance brokers take effect. The Australian Securities and Investments Commission’s (ASIC’s) new rules require brokers who provide personal advice to retail clients to obtain informed consent from them about receiving an insurance commission before brokers can sell them the insurance.
Insurance Business reached out to industry stakeholders to find out how brokers are preparing for changes that will impact the way many of them work.
“Our business has considered its response and procedures some time ago and is ready to implement and deliver now,” said Ben Goodall (pictured, left), CEO of PSC Broking.
“Providing personal advice to retail clients in an entirely informed fashion should be the goal of every broking business regardless of legislation and we see these consent rules as a way of ensuring the entire industry upholds our existing values,” he said.
Goodall said the main efforts around implementation for the informed consent rules were the addition of further steps to the transaction process and educating his broking team. “The legislation moves to brokers confirming verbal or written consent before we can receive/transact commissions, in the circumstances where informed consent is required for retail products,” he said.
The addition of these steps can make providing service to clients less efficient “in an already compliant heavy series of steps.” However, he suggested that the transparency gains and service value in the new rules make any extra work worth it.
Bendigo Insurance Brokers has also put time into adjusting to the rules. “Yes, we’ve already started preparing and through the support of the broader Aviso Group and Envest we feel we’re in a good place,” said Darryn Ellis (pictured, right), the firm’s partner and compliance manager.
Ellis said there is “a bit of a learning curve” particularly for some of the older and more experienced team members who could be more set in their ways (Ellis included himself in this list), rather than younger, possibly more adaptable recruits.
“We’re optimistic it will be a smooth transition overall,” he said. “We’ve seen many changes over the years, and, like any other, the main challenge is adjusting our mindset and workflows.”
Like Goodall, Ellis said his firm has always valued transparency and he supported the changes.
“The intent behind the changes certainly aligns with our approach,” he said. “While this extra step feels a little foreign right now, we will learn to navigate along the way and are confident it will become second nature in time.”
In a recent IB interview, Ruth Lynch, co-principal with White Edges Advisory, said the new obligations are all about enhancing transparency, accountability and acting in the best interests of clients.
“In plain terms, that means you need to clearly explain who is paying you, how much you will get, how often you will get it and what you’re doing for the commission before the policy is issued or sold,” said Lynch. “If the client does not understand and agree to this, you cannot accept the commission as it will be considered conflicted remuneration.”
How is your brokerage firm adjusting to ASIC’s new informed consent rules? Please tell us below
