MenuRisk advisers will need to commence the new life insurance client consent obligations well before the 9 July 2025 commencement date.
The transition arrangements in Section 1708E of the Corporations Act, state that the new client consent obligations apply to benefits given on or after the commencement of that Part {9 July 2025} in relation to the issue or sale of general insurance products, life risk insurance products or consumer credit insurance on or after that commencement.
This means that it is the date of ‘issue or sale’ of the policy that determines if the new consent requirements apply, not the date on which you provide your advice. Given the time that it may take for the insurance policy application to be processed and underwriting to be undertaken, it might mean that there will be a reasonable delay between when the advice is provided and when the policy is issued or sold.
For example, if it took a month for the new policy process to be completed, then advice provided on 9 June 2025 may need to include the new client consent for a product that was eventually issued or sold on or after 9 July 2025.
It is important to ensure that you have provided the required disclosure information to your client and obtained a compliant client consent before any commission has been paid for insurance policies issued or sold from 9 July 2025. Otherwise, the commission would be classified as conflicted remuneration, be considered non-compliant, and attract penalties.
Thus, we recommend that licensees commence this new requirement well in advance of the stated 9 July commencement date and take additional steps by:
- identifying and monitoring your existing cases that are in progress, that may be impacted by policy processing delays, and
- carefully checking the date of issue or sale for new policies where there has been a delay in processing, to identify cases where the consent obligation has not previously been met and the policy is issued on or after 9 July 2025.
Otherwise, the adviser will need to go back to the client to get this consent process completed before the commission is paid.
For further information on the Life Insurance Client Consent obligation please refer to ASIC Information Sheet 292, although it is important to clarify that this info sheet does not address the commencement timing issue discussed above. We have raised some further issues related to this info sheet with ASIC.
The FAAA has also provided a video guide on the Life Insurance Client Consent obligation. Please click here to access that member guidance.
Please contact the FAAA policy team on policy@faaa.au, if you have any questions with respect to life insurance client consent.
