A consumer group has criticised the National Insurance Brokers Association (NIBA) for “winding back commitments” on disclosure of commissions. 

As reported by insuranceNEWS.com.au, NIBA will change its code of practice so that disclosure requirements on commissions only apply to retail clients, not small businesses. 

NIBA says that extending the requirements to small businesses adds complexity for “limited value”, and focusing on retail clients gives consistency with the Quality of Advice Review final report. 

But Financial Rights Legal Centre CEO Karen Cox told insuranceNEWS.com.au that the group is not impressed. 

“We are disappointed that insurance brokers have taken this step to wind back commitments already made under the Code of Practice relating to disclosure of commissions. 

“NIBA spent years reviewing their code, consulting with consumer groups and agreeing on these changes, only to take a step backwards with little consultation at the earliest opportunity. This is far from best practice code management.” 

Quality of Advice Reviewer Michelle Levy told insuranceNEWS.com.au that while her review recommendations do focus purely on retail customers, this simply reflects the review’s terms of reference. She says her views on disclosure and consent around commissions also extend to small business.  

“The fact that my recommendations are limited to retail clients is because that was the scope of the terms of reference – not because I thought a lower standard should apply to wholesale clients,” she says.  

“The law may be silent on wholesale clients because there may be a view that they can look after themselves. But surely disclosure of commissions helps build trust and confidence.  

“My reasoning doesn’t just apply to retail clients.” 

NIBA says small businesses do qualify as retail clients when purchasing retail products, and that many brokers disclose commissions to small business clients of their own volition. 

See Analysis.