BACKGROUND INFORMATION

Insurance commissions are monetary benefits paid to financial advisers, or brokers, by insurers. These commissions are intended to compensate advisers for recommending and arranging insurance products.  

Historically, insurance commissions created a risk of conflicted remuneration, where it may be perceived that advisers were prioritising products that paid high commissions, rather than best interest for the clients.  

July 9^th 2024, the Delivering Better Financial Outcomes (DBFO) Act came into effect, focusing on simplifying financial advice regulations and improving consumer outcomes. These goals where furthered with the release of ASIC’s Information Sheet 292, which provides guidance on how entities and advisers can meet the new insurance commission requirements, that came out of the DBFO Act.  

CHANGES TO INSURANCE COMMISSIONS

From 9^th July 2025 receipt of these monetary benefits, in connection to general insurance, certain life insurance, and consumer credit insurance, must be disclosed to the client prior to the insurance being issues, or sold. 

This change requires advisers to provide a disclaimer to the client, either in the Authority to Proceed (ATP) or Statement of Advice (SOA). This disclaimer must now include:  

• The rate of commission, as a percentage of the premium 

• The frequency and duration of the initial and ongoing commission 

• The services provided in relation to the commission 

• A statement that consent is required by law, and cannot be withdrawn, in regard to that insurance commission and documentation. 

• Client’s informed consent must be written, or there is written record of verbal consent, and that record of this must be maintained for 7 years.  

• If the client does not consent to the variation, the original consent remains valid, but only for the original terms. You cannot receive the increased commission without updated consent. 

If the commission rate or frequency changes (e.g., due to a premium increase), you are required to disclose these updated commission details and obtain a new consent from the client prior of the revised amount, prior to the actioning of any new commission payments.  

For clients that have already signed consent prior to July 9^th 2025 are not required to sign a new consent form until there has been a change to the insurance product, commission payments, and services provided.

IMPACT OF CHANGES

These changes create greater transparency and accountability about the insurance commissions payments; this disclosure also reduces the risk of conflicted remuneration with the focus being clearly on the best interests of clients. 

This also creates a further burden on compliance, with the maintenance of detailed records of consent, and the requirements for new consent.

EXAMPLE STATEMENTS

to provide assistance in the record-keeping of this consent.  

An example of a statement in regard to the services provided in the commission is: 

“The services provided with the product commission include arrangement of the policy, transacting the policy, ongoing servicing of the product and policy, as well assistance in lodging and managing claims. “  

An example of a statement of the consent disclosure is: 

“Consent must be obtained before any insurance commission can be received. As per section 963BB (1) of the Corporations Act 2001, once your consent has been provided, it cannot be withdrawn in relevance to this insurance product and fee distribution, if there are any changes to the fees or product, new consent is required before any commission 

By signing this agreement, you acknowledge and consent to the distribution of the commission in relation to the insurance product provided. “ 

For more information, ASIC’s Information Sheet 292  can be found here: https://www.asic.gov.au/regulatory-resources/financial-services/giving-financial-product-advice/faqs-informed-consents-for-insurance-commissions/ 

If you have any questions, please do not hesitate to contact as on support@grcessentials.com.au