ACIL Warns NIBA: Failing to Lead Reform Invites Regulatory Intervention

The Australian Consumers Insurance Lobby (ACIL) has warned that the Independent Review of the Insurance Brokers Code of Practice and NIBA’s response exposes the structural limits of self-regulation, reinforcing perceptions that regulators, rather than industry codes are now the primary means by which consumers can be protected from conflicted and opaque insurance broking practices.

The Independent Review makes it abundantly clear that the sector is divided. On one side are those calling for reform — a Code that is client-focused, transparent, modern and capable of managing real conflicts of interest. On the other are those clinging to the status quo, insisting that existing laws are enough, that brokers always act in clients’ interests and that no meaningful change is required.

Most concerning is NIBA’s repeated reliance on the argument that the Code of Practice need only reflect existing legal obligations. In doing so, NIBA points to the Corporations Act (such as Regulatory Guide 181) as already providing comprehensive requirements in areas such as conflicts management and the provision of advice.  That position fundamentally misunderstands the purpose of self-regulation.

“A Code of Practice is not meant to be a cut-and-paste summary of the Corporations Act. Self-governance exists to lift standards above the legal minimum, to address emerging risks and to prohibit practices that may be legal but are plainly unacceptable.  By failing to do this, NIBA undermines the case for self-regulation and instead invites regulatory intervention.” Mr Shandiman said.

The Review itself documents serious and persistent concerns about insurance broking practices — particularly in strata insurance, the industry’s longstanding Achilles’ heel — including entrenched conflicts of interest, opaque remuneration arrangements and governance failures that have attracted sustained media, regulatory and consumer scrutiny.

“One clear example we raised in our submission was the need for the Code to expressly prohibit brokers from paying referral fees or other benefits to people who owe a fiduciary duty to the client, such as strata managers. ASIC Regulatory Guide 181 doesn’t spell this out, but that’s not the point. This isn’t about regulatory silence — it’s about professional responsibility. If it’s unlawful for a fiduciary to receive a payment, then it is clearly not right or fair for a broker to facilitate or be complicit in that arrangement, regardless of whether a regulatory guide explicitly says so. NIBA has an opportunity to lead here by making it clear in the Code that brokers should not engage in practices that rely on or enable conduct that undermines a client’s fiduciary protections, rather than leaving these issues for regulators to clean up later.”

“The fact that conduct may sit within the letter of the law does not mean it should be permitted. NIBA’s role as the steward of a self-regulatory Code is to operate ahead of the law, setting higher standards and intervening where practices undermine consumer confidence or professional integrity. By choosing not to do so, NIBA is not avoiding regulation — it is simply leaving regulators to do the work the industry has declined to undertake itself.” Mr Shandiman said.

By choosing to frame conflicts of interest largely by reference to existing law, NIBA effectively concedes that the Code of Practice is not the primary mechanism for driving reform. In those circumstances, regulatory oversight becomes the only practical safeguard for consumers. ACIL is now reviewing its position and considering its next steps.