Brokers have rebutted criticism of commission disclosure practices, arguing that clients will not benefit from expanded obligations.

As insuranceNEWS.com.au has reported, the Insurance Brokers Code Compliance Committee and Australian Financial Complaints Authority have criticised the National Insurance Brokers Association for not pushing forward with a code review recommendation to require remuneration disclosure for all small business customers.

And Quality of Advice reviewer Michelle Levy said this week that she believes brokers have an “ethical obligation” to disclose all remuneration.

“Michelle… I disclose [commissions] and am more than comfortable, but to say all brokers who aren’t yet disclosing are unethical is an absurd statement,” Joe Daley wrote on LinkedIn.

Some brokers have contacted insuranceNEWS.com.au anonymously to make their views known.

“In 40 years I have never been asked by any of my clients what commission I earn,” one said.

“All [expanding requirements] will achieve is more work. We have enough disclosure and compliance requirements already.”

“Real brokers who deal with clients every day know that disclosing commissions is the fastest way to ensure they get eaten away until we can’t afford to give advice,” another added.

“We use the same commission structure for risk advice all over the world.”

MGA MD Paul George says that commission should not be seen as “something improper”.

“Commission is paid to us by our carriers to fund costs associated with administration, claims, renewal, and debtor management along with policy administration and data processing and support on insurer systems,” he said.

“Arguments for expanded disclosure appear to be based on principle rather than demonstrated consumer detriment.

“The current debate around remuneration disclosure has reached the point where we feel a simple question needs to be asked: ‘What evidence exists that small business clients are being harmed by the current commission disclosure arrangements?’”

This chimes with NIBA's position, which is that there is no demonstrated consumer harm to show that expanded requirements are needed, and that any new obligations come at a cost.

Mr George says if the industry proceeds with greater disclosure, it should be “across the board”.

He says that just applying it to small business would be “impractical to implement and impact businesses like MGA disproportionately”.