The Australian Consumers Insurance Lobby Inc. (ACIL) has conducted a comprehensive inquiry into the actions of the National Insurance Brokers Association (NIBA) following its decision to amend the Insurance Brokers Code of Conduct (the Code) in the wake of the Quality of Advice Review by ASIC.
Before the Quality of Advice Reviewcommenced, NIBA proactively introduced amendments to the Code,requiring the disclosure of remuneration details to both individuals and small businesses. However, after the review's conclusion, NIBA altered the disclosure requirements to revert back to the original definition to include only retail clients.
This sequence of events led ACIL to scrutinise whether NIBA used the Quality of Advice Review as a pretext to backtrack on prior commitments, thereby raising legitimate concerns about the association's ethical conduct throughout the review process.
ACIL engagedin constructive dialogueswith NIBA, who demonstrated transparency and cooperation. NIBA clarified that the Code's modification was driven by member feedback following its release. Regarding the timing, NIBA confirmed that the decision was made before the review concluded but was deferred to accommodate potential further changes based on the review's findings.
Key Findings by ACIL:
It was prudent for NIBA to wait for the review's conclusion to finalise the Code.
No evidence suggests that NIBA exploited the outcome of the Quality of Advice Review to weaken the Code's impact.
The updated remuneration disclosure requirements in the 2022 Insurance Brokers Code of Practice, offer enhanced consumer benefits compared to the 2014 version.
ACIL emphasises, however, that NIBA could improve its communication to mitigate misunderstandings. Ideally, NIBA should have clearly communicated its intent to amend the Code both at the time of the decision and during the review.
On the subject of disclosure, ACIL conveyed its support to NIBA for comprehensive remuneration disclosure for all clients, both retail and wholesale, during consultations. ACIL Chairperson Tyrone Shandiman stated, " If insurance commissions are an equitable method of compensation, why not prominently present this information within key documents in 20-point bold font, to all consumers, irrespective of their classification?”
ACIL acknowledges that the new Code brings about favourable outcomes for consumers, featuring clauses that enhance transparency, accountability, and ethical conduct.The Code's effectiveness ultimately depends on brokers actively promoting and implementing its provisions, whilealso holding themselves and their colleagues accountable for compliance.