Broking code compliance committee funding should be increased so more investigations can be pursued, independent reviewer Phil Khoury says.

Not increasing resourcing to a level where regular “own-motion” inquiries can be undertaken would be “at considerable cost to the standing of the code and the broking industry”, he warns.

Code reviewer Mr Khoury, from law firm crkhoury, says in his final report that the Insurance Broking Code Compliance Committee’s most recent own-motion inquiry was completed in 2022.

The ability of monitoring bodies to undertake analysis and own-motion projects, and to publicise them, has greater impact on code credibility and improving practices than isolated enforcement activity, he says.

“For this reason, we place more importance on the adequacy of the resourcing provided by [the National Insurance Brokers Association] to the IBCCC than on incremental changes to the IBCCC’s sanctioning powers.”  

The report – released yesterday – recommends NIBA maintain funding to support at least one inquiry a year without compromise to other IBCCC activities.

As reported in a Breaking News bulletin, the report recommends remuneration disclosure for all individual and small business clients, regardless of product.

It also proposes having conflict management rules in a standalone provision, while noting submissions pointing to a lack of confidence in inconsistent practices.

The report proposes NIBA ask the IBCCC to investigate remuneration and conflict management compliance, with the committee to make mid-term code revision recommendations if needed. It also suggests an inquiry into the provision of personal advice.

The report describes the sector as diverse and opaque, with “quite polar differences in views” among brokers, and warns the profession faces challenges to its reputation and its self-regulation due to factors including changing expectations.

“Broadly, the profession has been built on specialised knowledge and trusted relationships. To maintain these in the much more testing and sceptical environment that exists today will require more transparency and more ‘proof of trust’,” the report says.

“While we found that the often-repeated narrative of brokers as purely advisers who act only for the client has some considerable basis in fact and is authentically believed and applied by many we spoke with, we also found that it [is] not always true, nor, increasingly, is it seen that way by clients and other stakeholders.”  

NIBA says it’s carefully considering the report and will release a response soon.

See the full report here.

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