Brokers need to raise their game on client communication and disclosure of income arrangements, the profession’s code monitor says in its annual breach report.

The number of reported code breaches grew 19% to 5513 last year, and complaints were up 14% to 2898.

“While these numbers might appear concerning at first glance, they also reflect improved breach detection and a more proactive reporting culture,” Insurance Brokers Code Compliance Committee chair Oscar Shub said.

“These results suggest many brokers are taking their compliance responsibilities more seriously, and that’s a step in the right direction.” 

However, the committee remains concerned that 42% of brokers reported no breaches or complaints last year. It is an issue the monitor has raised in previous data reports.

“That figure raises red flags … there is still work to do,” Mr Shub said. “No organisation is immune to mistakes. Reporting zero breaches or complaints may indicate a lack of internal scrutiny, rather than flawless services. We urge all brokers to reflect critically on their compliance systems.”

Communication and remuneration disclosure failings are equally concerning.

Breaches involving failure to provide clients with timely and clear communication jumped 37% to 1063, and breaches of the obligation to engage with clients at least 14 days before their policies expire increased to 1963 from 1535 the previous year.

“These are breaches that all brokers should be concerned about,” Mr Shub said. “They’re missed moments of service.

“Failing to give clients timely notice can leave them exposed and unsupported at the exact moment they need advice and clarity.”

The number of remuneration disclosure breaches increased sharply to 334 from 42. Since November 2023, brokers have been required to reveal arrangements, including commissions, to retail clients.

“The increase may be the result of greater attention from brokers,” the committee said. “In preparation for new informed consent requirements [that began last month] many brokers reviewed and improved their approaches to disclosure and ensured their practices were in line with the code.”

The committee says the increase may also reflect heightened community awareness of the issue and expectations for transparency.

Mr Shub said: “We expect brokers to identify and report problems, but we also expect those problems to reduce over time. It is important to hold both ideas at once: transparency and improvement.”

Find the report here.