The National Insurance Brokers Association says its members are “overwhelmingly” against expanding code of practice remuneration disclosure requirements to all small business customers – but a significant stakeholder has accused the peak body of trying to “defend the indefensible”.

In a recent webinar for brokers, past president Di Phelan explained that comprehensive consultation since January – when NIBA publicly supported the expansion – led to the current stance in the new draft code.

While the independent code reviewer’s recommendation to require disclosure to all small businesses regardless of product is not included, there is a new requirement for strata customers, and any client that asks for details of commissions must be told.

“[Consultation with members] overwhelmingly showed that they didn’t feel there was a need to change, to add more complexity to disclosure,” Ms Phelan said.

“Complexity adds cost and they didn’t see that there was any client value in that.”

Ms Phelan says NIBA’s “compelling” client research, showing high levels of trust, “backs that up”.

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“Clients of brokers fully understand the value ... To change anything, rather than where we’ve landed, would add cost for members, would not add value to clients, and there is no evidence to say that there is client harm in this area.”

She stresses NIBA “does want transparency” but says that is dealt with elsewhere in the code.

“For me, the terms of engagement in the code are just so critically important… We have to talk about how we’re remunerated in the terms of engagement.”

Ms Phelan says in strata there is evidence of harm, “and that’s why strata has changed”. She adds that the obligation to give any client details of remuneration on request provides “broad protection”.

“And if the client says, what is the total income ... Obviously, they can see the fee, but if the commission doesn’t need to be disclosed and isn’t disclosed and they ask the question, you have to tell them that dollar figure. So that provides a broad protection for both retail and wholesale clients.”

However, as previously reported, many stakeholders – including the Australian Financial Complaints Authority – have criticised the decision not to make wider disclosure a requirement.

“NIBA seems committed to defending a position that I believe is indefensible,” AFCA CEO David Locke told insuranceNEWS.com.au.

AFCA this week published its submission on the draft code, arguing that requiring remuneration disclosure for all policies, for any product and to any client is an essential and overdue reform.

“Absent a meaningful response to this issue in the code, AFCA will join all the growing calls for a legislative response,” the submission says.

“AFCA believes this is the industry’s final chance to do the right thing on disclosure. If it fails to do so, then there is a compelling case for the government to intervene.”