The National Insurance Brokers Association (NIBA) has released a revised draft Code of Practice along with an Independent Reviewers report, after an earlier version was criticised by consumer groups and the compliance committee for not sufficiently raising standards.

“Having reflected on the at times strong criticisms levelled at the current Code of Practice, NIBA proposes an entirely revised code that seeks to meet current consumer expectations and build on NIBA’s commitment to greater professionalism as an industry,” CEO Philip Kewin says.

NIBA says the new version addresses many of the criticisms of the original document while respecting the individual business models of broking firms. It’s intended to be accompanied by an implementation guide to assist members putting it into practice.

“Given the proposed code has been rebuilt from the ground up, NIBA also plans to make training available to NIBA members to assist in adoption and promotion of the code,” Mr Kewin says.

NIBA released a discussion paper in February along with a document outlining its initial views on proposed changes following preliminary consultations last year.

Independent reviewer Marigold Magnaye, of Asperdel Consulting, says ten submissions were received in response to the February release.

Six were from members of NIBA and the balance from the Insurance Brokers Code Compliance Committee (IBCCC), Consumer Federation of Australia (CFA), Australian Finance Industry Association and the Australian and New Zealand Institute of Insurance and Finance.

“Overall, the CFA and IBCCC submissions strongly criticised the existing and proposed NIBA Codes of Practice and advocated for a complete re-write,” Ms Magnaye says.

Submissions from NIBA members were generally short but supportive of the code and changes to improve industry professionalism.

“One submission from a large broking firm suggested winding back some of the changes proposed by NIBA due to implementation challenges and the extension of commitments beyond that required at law,” she says.

Ms Magnaye says that while there has been a delay in sharing a further version of the code for feedback, significant discussion with the NIBA member leadership has taken place and major changes made.

“Buy in and engagement by subscribers is critical to the success of the code as a way of setting and elevating standards of practice to a level above the law,” she says.

The new version includes a vision statement, extends the document’s reach beyond current clients, and sets out an obligation to inform a prospective client of the extent of service to be provided, including limits on insurance products the broker can arrange.

A clause provides that where there may be a conflict of interest, the subscriber will only continue to act with the client’s express written consent, addressing the problem of disclosure embedded in fine print.

Draft changes remove volume-based incentives and profit-sharing arrangements with insurers except when acting under a binder arrangement with an insurer. A table in the document provided by Ms Magnaye says it’s not unusual for cover to be placed under binders.

Other changes have been made around complaints processes and commitments toward vulnerable clients, and the revision includes “a clear effort to adopt plain language and tone”.

Submissions on the draft code are due by December 10. More information is available here.