A new version of the Insurance Brokers Code of Conduct has been published, with revised wording around the disclosure of remuneration.
The National Insurance Brokers Association (NIBA) said in July that it would remove the requirement for brokers to disclose remuneration, including commissions, to small business clients, instead restricting that part of the code to retail clients.
Most of the code was implemented last November but the implementation of section 6.1 was delayed for 12 months until November 1 this year.
Up until yesterday, the version of the code accessible on NIBA’s website said: “If a client is an individual or a small business and we are acting on their behalf, we will provide them with information about any remuneration (including commissions) or other benefits we will or expect to receive as a result of providing covered services.”
Now section 6.1 has been updated to say: “If the client is a retail client (as defined in the Corporations Act 2001 (Cth)) and we are acting on their behalf, we will provide them with information about any remuneration (including commissions) or other benefits we will or expect to receive as a result of providing covered services.”
As insuranceNEWS.com.au has reported, consumer groups and the independent Insurance Brokers Code Compliance Committee have criticised the change, with the committee saying it is “deeply concerned” and pledging to continue to fight for disclosure of commissions to small businesses.
NIBA previously said the change is in accordance with the Quality of Advice Review and government response, and that it will “avoid additional administrative complexity for brokers and confusion for their clients”.
The latest code also contains other “small changes” that NIBA says don’t alter or remove any obligations but rather “clarify the intent of certain code provisions and safeguard against unintended consequences”.
A note sent to NIBA members this morning says those changes include:
– introducing an exemption to the obligation to take steps to help clients understand the advice you have provided (section 5.1b) where general advice is provided in generic advertising materials
– amending section 5.3 to clarify the intended scope of the best interest duty referred to throughout this and other sections
– changes to definitions of excluded services, covered services, and retail clients to improve readability and align with their use in the code text
– minor drafting changes to improve readability and comprehension.
“The 2022 Insurance Brokers Code of Practice has been well received and has provided significant benefit to consumers since its introduction,” NIBA said in the note.
“NIBA is proud of the advancements made and is committed to working with members and other stakeholders to promote professionalism within the insurance industry.”
Click here to read the new code.
