Advisers selling insurance may find themselves being conflicted by trying to meet the interests of their clients and the demands of their insurers under the Government’s new Design and Distribution Obligations and Product Intervention Powers legislation.
The Senate Economics Legislation Committee has been told that the legislation places monitoring and reporting obligations on advisers and brokers as distributors of policies covered by the Bill that will be controlled by the insurer.
It has been told this will place advisers and brokers in conflict with insurers and may have the effect of reducing the number of consumers seeking personal advice and the protection that comes with it.
The National Insurance Brokers Association (NIBA) said that where an insurance broker is acting for client and not the insurer, this is likely to cause conflicts of interest.
“The costs that will be imposed on our members in complying with the monitoring and reporting obligations required by the Bill are likely to outweigh any benefits the Bill aims to offer to consumers arising from this reporting,” the NIBA submission said.
It said that with other insurance-related reviews currently underway with the potential to impact the new legislation, including work being undertaken by the Royal Commission, the NIBA did not believe it was appropriate to include insurance in the Bill until proper consultation had occurred.
The submission said such consultation needed to involve the industry, the regulators and the Government to identify appropriate and clear minimum obligations in the context of other reforms, undertake a proper cost/benefit analysis and determine an appropriate transition period.