The Insurance Brokers Code Compliance Committee (IBCCC) has encouraged subscribers to be as transparent as possible around remuneration and has suggested processes for complaints handling. 

The IBCCC has surveyed subscribers on their transition to the latest code of practice and has released a report with findings, examples of good practice, and guidance and recommendations for improving compliance. 

Most subscribers “took the code transition seriously and prioritised it appropriately” but there’s still more to be done, the IBCCC says. 

“We encourage every subscriber to review systems, processes and other compliance frameworks regularly to ensure they meet the code’s requirements. Every subscriber should look for opportunities to improve and embed the code obligations in its culture,” it says.  

The new code removes contingent and preferential remuneration and volume-based commissions or profit-sharing arrangements, while commission disclosure requirements under Section 6.1 apply to retail clients, as defined in the Corporations Act. The section took effect on November 1, a year after the rest of the code, after discussion about whether it should extend to small business.  

“To promote transparency and accountability of the broker-client relationship, where possible, disclose remuneration to all clients, for all policies,” the IBCCC recommends in its guidance. “Put disclosure information in writing using simple and plain language. Ensure that clients understand how brokers are being compensated without any confusion.” 

Brokers should obtain written consent from clients before accepting a commission, providing a “genuine opportunity” for the client to make an informed decision before deciding on a product, it says. 

On complaints handling, the report recommends having a centralised tracking system to monitor progress and ensure complainants receive timely updates. 

“Failing to provide updates to complaints every 10 business days should inform the breach reporting system and be included in staff performance reviews,” it says.  

The IBCCC recommends establishing an escalation procedure for complaints, particularly when the staff member handling the issue is the subject of the complaint, saying it is important clients trust that their matter will be resolved without bias. 

Guidance includes creating a reporting system that encourages all staff, including authorised representatives, to report incidents and code breaches without fear of blame, and promoting breach reporting as an opportunity to rectify mistakes and prevent recurrence. 

Terms of Engagement documents should be publicly available and easily accessible, it says, highlighting that broker-client relationship transparency builds trust in the profession and ensures that clients make informed decisions. 

Overall, the IBCCC says it’s pleased to see that many subscribers updated their processes, procedures and policies as part of their code transition activities. 

“At the time of reporting, 63% of subscribers had updated their processes, 60% their procedures and 56% their policies,” it says.  

The report is available here.