The National Insurance Brokers Association (NIBA) will examine the findings of an independent review that is critical of possible lax approaches to compliance by some firms bound by the code of practice.

The Insurance Brokers Code Compliance Committee Annual Review raises issues over self-reporting, suggesting systems and frameworks may be allowing problems to slip by without proper attention.

The review findings will be considered at NIBA’s November board meeting.

“We take our code seriously because the commitment to professionalism in insurance broking is fundamental to NIBA,” CEO Dallas Booth told insuranceNEWS.com.au. “To the extent to which weaknesses are being identified, we welcome that.”

Committee Chairman Michael Gill says results show that brokers need to take their code obligations more seriously and focus on embedding a culture of good industry practice within their businesses.

“Self-reporting of breaches has improved but we remain concerned that the majority of code subscribers reported nil code breaches in 2018,” he said yesterday.

“Brokers should be actively encouraging code breach self-reporting by increasing awareness of staff at all levels to understand why the code exists and what their obligations are to clients.”

Mr Booth says further discussions will be required to better understand the concerns around breach reporting.

“The report is brand new and we need to get to the bottom of that ourselves,” he said. “We need to talk to our members about their views about breach reporting and the extent to which they are doing their own internal monitoring and the extent to which they are satisfied about the operation of the code within their particular firms.”

The review says a 32% increase in self-reported code breaches may reflect a positive reporting culture but could also warrant a review of the reporting structure and framework and better staff training in compliance.

The fact that 57% of code subscribers self-reported nil breaches last year may imply internal frameworks are not robust enough to identify breaches, rather than signaling a job well done, it says.

Australian Financial Complaints Authority GM Code Compliance and Monitoring Sally Davis says data analysis raised issues the committee wants to call out to ensure brokers are not becoming complacent.

These include large organisations reporting no breaches whatsoever across the whole organisation, in results that would be unusual in the self-regulatory environment.

“This is the nature of self-reporting. You have to test the premise of whether nil breaches for a large organisation makes sense,” she told insuranceNEWS.com.au.

In another reg flag, most code breaches are put down to manual error or a failure by staff to follow processes and procedures, but paradoxically only 2% of reported breaches relate to adequate training standards.

“It is really just calling it out and asking them to improve their reporting framework,” Ms Davis says.

The AFCA Code Team supports independent committees in monitoring compliance across various financial sector codes of practice.

NIBA has commenced a review of its code, appointing Marigold Magnaye, a former NIBA board member who has been a senior executive at Willis Towers Watson, to guide the process.

Changes will be influenced by industry feedback as well as recommendations from the Hayne royal commission.

The compliance committee report encourages NIBA to give priority to introducing changes to make the code more effective, and to be intolerant of those who "pay lip service" to their commitments.

“The committee believes that NIBA should work with its stakeholders to address with some urgency the most important issues for strengthening the code for the benefit of all,” Mr Gill says.