Consumer Groups Seek ASIC Investigation into Potentially Australia's Largest Insurance Broker Conduct Matter

Investigation concerns more than 1,000 strata insurance policies and requests ASIC examine potential breaches of the Corporations Act

The Australian Consumers Insurance Lobby (ACIL) and the Owners Corporation Network (OCN) have requested that the Australian Securities and Investments Commission (ASIC) investigate what may represent one of the largest matters ever referred to the regulator concerning the conduct of an Australian insurance broker.

The referral asks ASIC to investigate the apparent unauthorised appointment of an insurance broker across an estimated 1,000 strata insurance policies and to examine whether the broker complied with its obligations under section 912A of the Corporations Act 2001 (Cth) and Regulatory Guide 181.

The organisations have provided ASIC with an investigation briefing setting out the factual background and requesting that the regulator independently determine whether the conduct complies with the requirements of the Corporations Act.

ACIL Chair Tyrone Shandiman said the scale of the matter distinguishes it from previous misconduct matters.

"The issues we have asked ASIC to investigate potentially affect more than 1,000 strata insurance policies. To our knowledge, this represents one of the largest referrals concerning the conduct of an Australian insurance broker ever made to ASIC."

"This referral is not about asking ASIC to accept our conclusions. It is about asking Australia's corporate regulator to independently determine whether an Australian Financial Services Licensee has complied with its statutory obligations."

"Our recent decision to withdraw from consultations on NIBA's proposed Insurance Brokers Code of Practice marks a fundamental change in our approach. We are moving from working with NIBA on industry self-regulation to regulatory enforcement. By referring systemic matters to ASIC, we hope to build an evidence base that supports future regulatory reform, including strengthening ASIC's guidance on conflicts of interest under Regulatory Guide 181."

David Glover, Co-Managing Director of the Owners Corporation Network, said owners corporations were entitled to expect that insurance broker appointments were made transparently and free from unmanaged conflicts.

"The integrity of the strata insurance market depends upon confidence that broker appointments are made in the interests of owners corporations, not influenced by unmanaged conflicts of interest or related-party arrangements."

"While we are disappointed that our engagement with industry bodies has not delivered meaningful outcomes through self-governance, we are now turning our attention to regulators to ensure these issues are independently examined and, where necessary, addressed through enforcement and regulatory reform."

The organisations emphasised that the referral seeks an independent investigation only, and that it is for ASIC to determine whether any contraventions of the Corporations Act have occurred.