Brokers and underwriters must work together now to come up with a common response to the Australian Securities and Investments Commission’s (ASIC) broker inquiry, according to Vero CEO Duncan West.

ASIC’s investigation – which was spurred by New York Attorney-General Eliot Spitzer’s overhaul of the US insurance industry – was announced late last year. The regulator says the aim of the investigation is to determine whether brokers’ remuneration practices are in the best interests of consumers.

Mr West – who raised the issue at the Steadfast Convention in Auckland last week – told Sunrise Exchange News he doesn’t believe the investigation will uncover “any inherent issues”, but the industry needs to work on a unified response on commissions.

He says the industry could be compromised if individuals and associations “speak out” on the issue without taking a unified industry view.

He believes “from a personal point of view that contingency commissions are not appropriate going forward”.

While there is value in holding such arrangements from an underwriting point of view, “it’s time the industry started developing guidelines on commissions. That’s what we’ll be recommending to ASIC.”

Despite his call for the industry to work together, Mr West says he believes the inquiry won’t uncover evidence of foul play. “I think it will find the industry’s pretty clean.” 

But the industry should still adopt a proactive approach, and not “rest on its laurels” when it comes to the investigation. “We need to be prepared,” he said.

“When it comes down to it, since 2001 we have lost the trust of the community,” he said. “It’s time to be proactive and regain the confidence of the community.”