Starting July 10, 2025, new commission consent regulation will come into effect in the Australian insurance industry, introducing notable changes to how brokers and advisers operate. These reforms aim to enhance transparency – a word gaining considerable traction in the wake of recent scrutiny on commissions.

1. Overview of the Changes

The forthcoming legislation mandates that insurance brokers and advisers obtain explicit, informed consent from retail clients before receiving commissions for personal advice on insurance products. This requirement applies to general insurance, life insurance, and consumer credit insurance. ASIC has provided detailed guidance on these requirements in Information Sheet 292 and Regulatory Guide 246.

2. Applicability and Distinction Between Personal and General Advice

The consent requirements specifically target situations where personal advice is provided to retail clients. The distinction between personal and general advice here is crucial:

• Personal Advice: Tailored recommendations based on the client’s individual objectives, financial situation, and needs. For example, an insurance broker assessing a client’s specific circumstances to recommend a particular policy.
• General Advice: Information or opinions about financial products not based on the client’s personal circumstances. For instance, an insurer providing general information about a product’s features without considering the client’s individual needs.

Typically, insurance brokers and financial advisers provide personal advice, while insurers and their representatives may offer general advice.

3. Main Implications

The key implications of the new laws include:

• Enhanced Disclosure: Brokers must disclose specific information to clients, including the insurer’s name (if known), the commission rate as a percentage of the premium, and the frequency of commission payments. This information must be presented clearly and concisely.
• Obtaining Informed Consent: Clients must provide informed consent before brokers can receive commissions. Consent can be given in writing or verbally, provided a written record of the verbal consent is maintained. If the commission rate increases or the payment frequency changes, brokers must seek renewed consent.
• Record-Keeping Obligations: Brokers are required to maintain records of the consent obtained, ensuring compliance and facilitating potential audits.

4. How can you prepare?

To comply with the new requirements, industry participants should, as appropriate:

• Review and Update Disclosure Practices: Ensure that all commission disclosures are clear, concise, and effectively communicated to clients.
• Implement Consent Procedures: Develop standardized processes for obtaining and recording client consent, including templates for written consent and protocols for documenting verbal consent.
• Enhance Training Programs: Educate staff on the distinctions between personal and general advice, the new consent requirements, and the importance of compliance.
• Strengthen Compliance and Risk Management: Update compliance frameworks to incorporate the new consent requirements, including regular audits and monitoring to ensure adherence.

By proactively addressing these areas, providers can ensure a smooth transition to the new regulatory environment, maintaining trust and transparency with their clients.

At Curium, we are here to help you prepare for these changes—and support with your end-to-end risk and compliance management more broadly.