'We were right to insist on commissions transparency': NIBA
The National Insurance Brokers Association (NIBA) says the Quality of Advice Review final report vindicates its decision to include new remuneration disclosure requirements in the latest version of its code of practice.
As insuranceNEWS.com.au has reported, the implementation of section 6.1 of the new code was delayed until November this year, while the rest of the code has already taken effect. Some NIBA members were critical of the new disclosure requirements.
Speaking on an industry panel at the Steadfast Convention in Perth, NIBA CEO Phil Kewin pointed to Quality of Advice Reviewer Michelle Levy’s decision not to recommend a ban on commissions.
“The NIBA board made the strategic decision to get on the front foot and say, ‘ok, commissions are good, commissions have a role to play. But what is the one thing you can pick up about commissions? The lack of transparency.’ So that’s why we took the stance around transparency.”
He said general insurance commissions were only a small part of the Quality of Advice Review but “a pretty important part when you had consumer groups and other stakeholders saying commissions should be banned”.
“We made some decisions that people were challenging 12 months ago when we were talking about this, the introduction of the code of practice, setting standards above the law. But we did that for a reason.
“And I don’t think now from the Quality of Advice Review and where it’s ended up that we could have expected a better result.
“Independent Reviewer Michelle Levy said there is no evidence to suggest that there is any poor behaviour to justify the banning of general insurance commissions, so I think that’s great.”
Panel moderator and Steadfast MD & CEO Robert Kelly suggested that some people thought NIBA was “sticking its nose in where it shouldn’t be”, while making clear he did not hold that view himself.
Mr Kewin said that while broker clients “are fine” and not pushing for the change, the influence of consumer groups has to be taken into account.
“We want to make sure that we are not sitting back and letting things happen. If we’re going to get involved in things, we will. If you’re talking about introducing disclosure that wasn’t required, that had a specific purpose.
“As I said before, what is the one thing against commissions? A lack of transparency. So we didn’t stick our noses in, we stuck our noses out to say, ‘we’re prepared to do it’ and that was recognised in the review. Michelle Levy said the industry itself has changed since the royal commission.”
Section 6.1 of the code currently says “if the 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”.
It goes on to say that this information must include “the dollar amount of commission we will or expect to receive in providing Covered Services”.
But Mr Kewin told insuranceNEWS.com.au today that the wording will be reviewed after further consultation with members. Some members were particularly concerned about the inclusion of small businesses in the requirements.
“NIBA has always maintained that the code is a living document and that the details of Section 6.1 and the disclosure obligations would be reviewed based on member feedback and the recommendations of the Quality of Advice Review, which is something we are looking at now to consult with members given the review only focuses on retail clients,” he said.
