Chairman of the Insurance Brokers Code Compliance Committee Oscar Shub says a U-turn on remuneration disclosure for small businesses could damage the industry’s reputation, and the oversight body will fight the move.

As insuranceNEWS.com.au has reported, the National Insurance Brokers Association published its new draft code last week, but a key recommendation to expand remuneration disclosure to all small businesses, regardless of product, was not included. This is despite NIBA previously backing the recommendation.

“One must acknowledge that the draft code does have some useful reforms, including on vulnerability, family violence, records, complaints and conflicts,” Mr Shub told insuranceNEWS.com.au. “It does have some improvements, and I acknowledge that.”

However, he says the committee is “deeply disappointed” at the omission of one of the “central” independent review recommendations.

“The main thing has always been to effectively cover the disclosure issue, and to walk away from that is just astonishing,” he said. “They haven’t dealt with the central issue. They said they were going to put it in the code and then they’ve taken it out.

“We will be doing whatever we can, making whatever representations we can, to reverse that decision.”

The new code does extend disclosure requirements for strata customers, and says if any business asks for details they must be given a dollar figure. While welcoming the strata extension, Mr Shub says the “disclosure on request clause” does not address his concerns.

“Individuals and small business people don’t even know they have a right to ask. What small business person should have to go and read the code of conduct for the insurance brokers?

“Why are the brokers afraid of disclosing what they are earning from the service they are providing?

“I think that it’s brokers who don’t want to disclose their remuneration, and that is actually going to damage the image of the broking profession, because there are masses of brokers who do disclose it without being obliged to do so.”

Mr Shub says there is “no logic” to the current draft code wording, which relies on the definition of retail client in the Corporations Act, restricting disclosure requirements to individuals and small businesses buying certain products.

“It’s not the product that needs protection; it’s the client that needs protection.”

And he says the committee was given “virtually zero time” to comment on the draft code before it was released.

“One of our disappointments is the process issue,” he told insuranceNEWS.com.au. “Because the recommendation was made, the response was positive, and then without meaningful engagement with the committee – to discuss it even, or to indicate that it was likely and for us have an opportunity to comment and deal with it – it was not included.”

Mr Shub says the committee will “of course” support a “strong contemporary code”.

“Ultimately, we are saying to NIBA that the draft should be amended before it is finalised to implement the reviewer’s recommendation on remuneration disclosure.

“We will be saying to NIBA that they should be taking the lead and implementing the recommendation, which it clearly supported. It is a question of taking the lead because obviously their research has indicated some opposition to it.”

NIBA is consulting on the draft code, which includes a raft of other updates, until August 7. It is aiming for a January 1 launch.

The full document can be read here.