The National Insurance Brokers Association (NIBA) has said that a new set of regulations for the industry does not take account of existing obligations, including the statutory duty on insurance brokers to act in the best interests of their clients when giving personal advice to retail clients.
NIBA stated this in finalising its submission to the Federal Treasury in response to draft legislation which will implement the government’s proposals for the new regulatory process across all areas of financial services.
Briefly, every financial product which needs a Product Disclosure Statement will also be required to have a “Target Market Determination”, which specifies the target market for the product.
Insurers will be responsible for developing these new documents. Distributors of insurance products – those acting for the insurance company and insurance brokers acting for and on behalf of their clients – will only be able to distribute the product in accordance with the Target Market Determination.
NIBA CEO Dallas Booth said that the idea and the core principle is relatively clear. But the detail of the legislation has been developed with investment products in mind, not general insurance policies. It will be extremely difficult for insurers to develop Target Market Determinations that comply with the new laws, and it will also place a huge onus on insurance brokers to make sure they are operating in accordance with the Determination.
There are civil and criminal penalties for failing to do so.
NIBA will seek to hold detailed discussions with Treasury in relation to these concerns, Mr Booth said.