LEGISLATION

New legislation set to transform the insurance advice industry

By Bryan Tucker posted September 20 2019

Did you know that most insurance adviser aren't required by law to have any qualifications, knowledge or experience? They could have been a carpet layer yesterday and be advising you on your insurance needs today. What's worse, unless they are Authorised Financial Advisers, the law doesn't even require them to place your interests first.

New legislation that passed in April 2019 and beginning to take effect from November is set to change that.

The Financial Services Legislation Amendment Act (2019) removed the three current adviser types – Registered Financial Adviser, Authorised Financial Adviser and QFE adviser and replaced them with Financial Adviser, Nominated Representative and opened up the possibility of RoboAdvice **.

Under the new legislation all Financial Advisers will need to meet the same standards of conduct and client care. Amongst other things, they are required to place the interest of the client above insurers , their employer or themselves.

The new regime starts to phase in from 4 November 2019 and will be in full effect from June 2020. From that date Advisers can only give advice to retail clients if they operate under a financial advice provider licence. 

The adviser can hold a licence themselves or work on behalf of someone else who holds a licence.

** RoboAdvice - digital advice provided by a computer with no personal interaction

New insurance regulations

While some background changes will be largely irrelevant to clients what will make a difference is that the adviser you obtain advice from will now be required to follow a strict code of conduct requiring him or her to:

- Treat clients fairly
- Act with integrity
- Give advice that is suitable
- Ensure clients understand the advice
- Protect client information
- Have general competence, knowledge & skill
- Have particular competence & skill about the products they give advice on
- Keep competence, knowledge & skill up to date

While you might have throught that these would be a given, only Authorised Financial Advisers, like those employed by Vesta Cover, have been held to those standards by regulatory bodies in the last 10 years.

So, look forward to a more client centred experience from your adviser in the future. 

No more Cowboy Insurance broker