Recent scrutiny of “appalling conflicts” in strata insurance will affect all brokers, the Australian Financial Complaints Authority has warned today.

CEO and chief ombudsman David Locke told the National Insurance Brokers Association Convention this morning that the ABC’s recent Four Corners episode, The Strata Trap, will have significant consequences.

“While I know not all brokers in this room deal with strata insurance, these issues pose a very real risk to the reputation of the entire industry,” he said.

“The episode highlighted quite appalling conflicts between strata managers, brokers and insurers. 

“Off the back of that story, people within my own owners’ corporation were asking each other questions about whether the strata manager and insurance broker can be trusted, and whether there is a different way to operate. Most customers will not differentiate among you. The poor practices of some will have consequences for all of you.”

Mr Locke said all brokers must now work to “regain trust from consumers and rebuild the reputation of the industry”. 

He also said the upcoming review of the broker code provides an opportunity.

“AFCA would like to see a stronger commitment in your code to transparency of remuneration and conflicts of interest. As I mentioned earlier, there are many eyes upon you now and the review of your code is an opportunity to draw a line in the sand on opaque and damaging practices.

“A hard lesson on the value of transparency was learnt by the banking industry, which is still, to some degree, dealing with the repercussions of the royal commission.

“We would like to see a bigger commitment from all facets of the insurance industry, including brokers, to getting ahead of these issues now.

“Because ultimately, if you’re not prepared to take on this important role yourselves, the risk is that someone else will come in and do it.”