Happy New Year!

The 2025/2026 financial year has officially arrived!

The end to the FY is always “a little hectic”… We do hope you finished the year on a positive note and you’re bright-eyed and bushy-tailed, ready for the opportunities this year will bring with it.

At the time of writing this, the new year had only just begun (cue The Carpenters), and a few deep breaths were taken in the Compliancing© world; we’ve had a big year in financial services. It’s always exciting, sitting with advisers and licensees, keeping abreast of changes and delivering practical insights, guidance and outcomes to our clients and broader network.

As always, we want to keep you informed and give you the information you need to remain on the right side of the Law and Regulator, so there are a few things we need to cover off in July.

This FY, we are facing a few changes that will likely result in a very high number of AFSLs and advisers feeling the pressure, particularly on 10 July 2025.

As part of the Delivering Better Financial Outcomes (DBFO) Reforms, advisers and representatives will need to obtain informed (and documented) consent prior to receiving commissions on:

• Life Insurance
• General Insurance
• Consumer Credit Insurance

This will then be an active acknowledgement, rather than the historical passive model. Clients must proactively agree (with full knowledge) of how much is being paid, by whom, why it’s being paid, and how long it will be paid for.

Consent will no longer be a ‘set and forget’ line item solely associated with disclosures in advice documents. These changes will demand more from advice providers and not just from the outset. It will be an ongoing requirement as relationships with clients continue and benefits are received.

It all has a lot to do with how benefits received influence the advice or product choice.

What needs to happen?

If commissions are received when providing, or being likely to provide, personal advice, advisers must:

• Obtain the client’s consent to receive the benefits before the insurance is issued or sold.
• Save a copy of the written or verbal consent on the file.
• Give the client a copy of the consent as soon as practicable after it was obtained.

For the majority of advisers, this will most likely result in a slight change in process; however, some may need to make bigger changes, depending on their client engagement processes in relation to The Code – specifically Standards 4 and 7, and a cameo from Standard 5.

The good news is that the new consent requirements don’t apply in the following situations:

1. Policies issued or sold prior to 9 July 2025.
2. Some non-monetary benefits. For example, benefits related to education, training, information technology software or support, or the value of the benefit is less than $300, specific consent doesn’t need to be obtained. However, they still need to be disclosed and managed as per the existing requirements.
3. Renewals of existing policies issued or sold prior to 9 July 2025.
4. Business transfers. For example, if a business is purchased, the new AFSL or representative does not need to obtain the client’s consent if it was obtained by the business being sold.

To meet the requirements under s963B(1)(b) and supporting ASIC guidance, we’d suggest the following be disclosed to the client(s) at the appropriate time:

Name of the insurer and product; Policy number (if known); effective date; commission amount – e.g. 66% of the initial and 22% of the ongoing; payment frequency – monthly/quarterly/annually; purpose of the benefits – e.g. to support services provided; and a statement confirming the following:

1. Commissions can’t be paid without consent.
2. Once the consent has been given, it can’t be withdrawn.

ASIC have confirmed that this can either be in writing or verbally, pending the following happens:

1. The remaining elements of s963BB are satisfied.
2. A written record of the consent is provided to the client (as soon as practicable) and saved on file.

You won’t need to provide a copy of this consent to the provider (although they might ask for it), but you do need to keep accurate records and produce the information upon request.

What if this doesn’t occur?

This is quite straightforward – the monetary benefit will be considered conflicted remuneration.

Consequences include civil penalties, banning orders or AFSL suspension or cancellation.

As per ‘Table 2’ of RG246 (Conflicted and other banned remuneration), there are heavy penalties for breaching the requirements:

Devil’s in the details…

We’d like to point out a couple of things in the language used by ASIC.

“Likely to provide”

“When providing, or being likely to provide personal advice” is quite broad (on purpose), and it suggests that the consent needs to be obtained when the client is engaged for advice – much like the timing of the provision of the FSG (RG175).

This may not be practicable, as the adviser may not know what the commission benefits would be, nor whether they are to be received, in a fee-for-service scenario where the product doesn’t pay commissions (e.g., industry fund cover).

ASIC’s position is clear, so to manage the uncertainty, we’d suggest the following in the initial stages of the advice.

“The informed consent requirement does not apply if the monetary benefit is being given to an AFS licensee or representative that has acquired all or part of the business of the AFS licensee or representative that initially received the client’s informed consent”

It is a welcome relief that consent is transferred when purchasing a business, but ‘IF’ is such a big word…

There is a risk that the previous AFSL or representative may not have initially received the client’s consent. This may have occurred in the past via non-disclosure, etc.

As always, before purchasing a business, we recommend conducting your own due diligence to ensure you can continue to receive the benefits.

Ongoing requirements

As ASIC have stated, consent is not required to receive commissions from policies issued or sold prior to 9 July 2025. That’s great, but there’s a catch (who’d have guessed?).

As we noted earlier, you may need to obtain consent if you purchased a business and receive commissions from policies already in place, if the business didn’t obtain this consent prior to receiving them.

Another instance where consent may be needed is if there are changes: insurer, rate increases, or the frequency of the payments changes.

This could either be at the adviser’s or client’s request, or it may be a decision made by the provider. Either way, if this occurs, consent will need to be obtained.

For example, if the existing product has been purchased by another insurer, or there’s been a merger since the original policy was purchased, consent may need to be obtained. For example, Comminsure was purchased by AIA in April 2021. If Comminsure were paying the commissions, it would now be AIA, so consent would need to be obtained. Variations can also be sought if changes need to be made to the initial information disclosed to the client(s). This may occur if there’s a change to provider, policy or adviser services, etc.

Tips:

• Construct a client pack (initial and existing) which includes consent forms, note templates and policy information (if existing).
• Standardise consent documents and include a script for verbal consent to save time.
• If recording the consent verbally, document in detail, or get permission to record (if recording via audio or video).
• Email a written summary to the client(s) in a reasonable time. We think 5 business days is suitable.
• Run an audit on existing clients and ensure consent has been obtained previously. Prioritise older policies with no recent client contact.

If you need help with any of the tips or understanding your changing obligations, contact our experts at Assured Support.

If you enjoyed this, you might also like:

1. Accepting the limitations of disclosure: Discusses the challenges of relying solely on disclosure and underscores the need for meaningful client engagement—a core aspect of the new consent obligations.
2. The Compliance Paradox – Why Good Advisers Still Fail: Explores why even well-intentioned advisers can fall short of compliance standards, emphasising the importance of robust processes and documentation, particularly relevant under the new consent requirements.
3. Beyond Compliance: Ten Ways to Elevate Your Advice: Offers practical tips for advisers to enhance client engagement and trust, which are crucial when discussing and obtaining informed consent for commissions.

Frequently Asked Questions

How do I document consent in my SOA?

We suggest including a section in the SOA that clearly discloses all commissions, supported by additional documentation or notes. These may include a signature space specifically referencing the consent, or a separate document outlining the information. 

What if my client doesn’t provide their consent?

1. Offer a fee-for-service alternative. The client can still receive advice, but you may choose to reduce the commissions to 0% and charge a fee instead.
2. Decline to provide the advice. Not ideal, but if the product is commission-based and the client won’t consent, then the advice may need to be declined. 
3. Pause until consent is obtained or cancel the payments.

What is changing under the DBFO reforms for insurance commissions?

From 10 July 2025, advisers must obtain informed, documented consent from clients before receiving commissions on life, general, and consumer credit insurance. This marks a shift from passive disclosure to active client engagement.

When and how must consent be obtained?

Consent must be secured before insurance is issued or sold, recorded (written or verbal), and provided to the client as soon as practicable. A copy must also be retained on file for compliance purposes.

Are there any exemptions to the new consent requirements?

Yes. Consent is not required for policies sold before 9 July 2025, specific low-value or non-monetary benefits (e.g. training), policy renewals, or when commissions are received following a compliant business acquisition.

What are the consequences of not obtaining client consent?

Receiving commissions without consent may be considered conflicted remuneration, triggering serious consequences, including civil penalties, banning orders, or even AFSL suspension.

How can advisers practically meet the new requirements?

Advisers should create client packs, standardise consent forms, keep thorough records, and disclose commission details upfront. Conditional or verbal consent is acceptable with proper documentation and follow-up.