Differences of opinion flew on Friday as the Australian Securities and Investments Commission (ASIC) released a relatively benign report into broker/insurer remuneration accompanied by a blistering media release that some people think doesn’t reflect the report’s overall tone.

The media release, quoting Executive Director of Compliance Jennifer O’Donnell, was judged negative enough to cop a serve from the National Insurance Brokers Association (NIBA), which chose to highlight its general satisfaction with the results of the exhaustive six-month review of 15 brokers and nine insurers.

NIBA was caught by surprise by the tone of Ms O’Donnell’s public comments, with CEO Noel Pettersen issuing his own media statement expressing “disappointment” at the tone of the ASIC release, “which does not reflect the overall thrust of the report”.

Ms O’Donnell’s comments in the ASIC statement are certainly stern, and several sources who discussed the report with her and other ASIC officers over the past couple of weeks are known to have also been surprised.

Among her comments was the statement that ASIC had found “more than half the brokers reviewed had contingent remuneration arrangements in place and most of those brokers placed a significant proportion of their business with insurers that paid extra commissions based on the volume of business placed with them”.

The actual report – which by late yesterday had apparently still not been read by any mainstream financial journalists – states: “In terms of economic dependence, the contingent remuneration amounts received by selected brokers in their latest financial years were immaterial, in the accounting sense, in relation to their annual gross revenue and annual net profit before tax…”

The “selected brokers” numbered six. Contingent remuneration as a percentage of their gross revenue ranged from .05% to 2.6%. As a percentage of net profit, the results ranged from 0.25% to 5% for five brokers; the sixth was about 40% last year.

Mr Pettersen says ASIC examined “truckloads” of information, and the report has effectively cleared brokers of any wrongdoing. “In the small number of cases where isolated deficiencies were identified, they were not judged serious enough to warrant enforcement action by ASIC,” he said.

“This report reinforces what we have been saying since last November, when the Spitzer inquiries in the United States first began – that Australian brokers are very tightly regulated and professional in their dealings with clients and insurers.”

Ms O’Donnell also highlighted in her statement the fact that contingent commission arrangements have increased – hardly surprising, as they were banned for brokers before the introduction of the Financial Services Reform Act – and warned that disclosure and controls of conflicts of interest associated with special remuneration arrangements may not be enough. “In such cases, the only way to adequately manage the conflict may be to avoid it.”

Mr Pettersen said the report’s comments on conflict of interest will be examined very closely. “Brokers believe the interests of their clients are paramount, and we’ll be working with ASIC to reinforce this across the industry.”

Ms O’Donnell – who is overseas and was not able to comment on NIBA’s concerns – says in the statement that conflicts and disclosure will be monitored and the regulator will be “performing follow-up work”.