The National Insurance Brokers Association has backed code review recommendations for disclosure of fees and commissions to individual and small business customers but has rejected making the document contractually enforceable.

NIBA today released a detailed response to 14 recommendations made by independent reviewer Phil Khoury, supporting six and raising concerns on others.

Mr Khoury – from law firm crkhoury – recommended remuneration disclosure for all individual and small business clients regardless of insurance product. He did not propose changing the definition of small business from those employing fewer than 20 people or, if a manufacturer, fewer than 100.

NIBA also backs updating vulnerability provisions, requiring brokers to contact clients about renewals at least 28 days before expiry, introducing an explicit record-keeping obligation, expanding the code review cycle to five years, and consolidating conflict of interest requirements into a standalone section.

But it rejects recasting the code of practice as promises to clients or making it contractually enforceable, arguing the move is more suited to product manufacturers than advisers.

NIBA says licensing obligations, engagement terms, client service agreements and Australian Financial Complaints Authority access govern the broker-client relationship, along with common law duties, and the code compliance committee provides enforcement rather than the courts.

“Adding a further layer of contractual enforcement could increase costs passed to clients without commensurate benefit,” it said.

Mr Khoury also proposed revisiting a strata remuneration disclosure template developed by consultant John Trowbridge for possible wider use, and recommended disclosure at both time of quotation and invoicing. 

But NIBA says requiring specific templates based on one context is too prescriptive for the variety of broking practices and clients.

“NIBA supports dollar-based disclosure at the invoice stage and flexible formatting that ensures transparency without a one-size-fits-all prescription,” it added. It will reinstate a disclosure provision from the 2014 code empowering clients to request additional information. 

Recommendations regarding the code compliance committee will be addressed through updates to that body’s governance and charter, rather than the code, NIBA says. It also notes a proposal around “good faith” wording is addressed elsewhere.

NIBA says a plain English rewrite of the code will clearly explain what clients can expect.

“The profession is committed to improvement,” NIBA code review committee chair Di Phelan said. “We now move to the next phase – consulting members and stakeholders to develop a revised code reflecting best practice for Australians.”

Public review of the revised code is expected in the second quarter.