Broking code of practice arrangements for addressing conflicts of interest are “wholly insufficient”, the Consumers’ Federation of Australia says.

The federation’s submission to the code review says strata controversies are symptomatic of a broader cultural issue in insurance intermediation, and the code has an important role establishing professional standards and guard rails for brokers in managing relationships.

The code should “commit brokers to identify and avoid actual and perceived conflicts”, and any that cannot be avoided should be managed in line with strict, publicly available policies that are regularly reviewed.

The peak body for consumer groups proposes that the code give examples of conflicts that cannot be managed by disclosure and should be avoided at all costs, including engaging strata managing agents as authorised representatives.

It says recommendations on disclosure made by John Trowbridge in his strata review should be taken up more generally.

“A broader rollout of these reforms would deliver consistent and meaningful improvements in transparency and accountability across the insurance industry, ensuring all clients – not just strata owners – are empowered to make informed decisions.”  

The federation says the code should not rely on the retail client definition or the distinction between general and personal advice as a threshold and, as a default, full disclosure should apply for all clients, with limited exceptions.

Other recommendations include removing vague or ambiguous language, and replacing references to “timely” and “as soon as practical” with strict time frame. 

Vulnerability support must be strengthened, and independent monitoring of the code enhanced, including allowing the naming of those who commit breaches.

The submission proposes the code form part of the contract with clients and that Australian Securities and Investments Commission approval be sought for the updated document.

Community attitudes around conflicts of interest and remuneration transparency have “clearly hardened in recent years” and the code review is timely, the federation says.

“It is important that the code continue to evolve with an eye to the future as well as the present, noting the nascent developments of artificial intelligence as a tool in insurance, as well as the increased presence of broker platforms and networks in the market.”

The submission is available here.