Updated Insurance Brokers Code of Practice and Implementation Guide
Updated Insurance Brokers Code of Practice and Implementation Guide
Following feedback and consultation with members, NIBA has made some improvements to the Insurance Brokers Code of Practice, to ensure the practical application of the Code. New versions of the Insurance Brokers Code of Practice and Implementation Guide, have been issued in advance of the 1 November 2022 implementation date.
The changes are outlined below and include the provision to extend the effective date of Section 6.1 until 1 November 2023 to allow more time for implementation, and or any additional changes required as a result of the Quality of Advice review, and our ongoing member consultations.
What the Code applies to
2.3 (a) The Code applies to all services and activities a Code Subscriber engages in when arranging or advising on general insurance products or alternative risk transfer solutions on behalf of a client. This includes services and advice relating to claims handling, premium funding and risk management (Covered Services).
Revised wording
The Code applies to all services and activities a Code subscriber engages in when advising on or arranging general insurance and other related products on behalf of a client including services and products provided on a stand-alone basis (Covered Services).
This includes but is not limited to;
(i) alternative risk transfer solutions such as discretionary mutual funds;
(ii) premium funding arrangements;
(iii) claims handling services; and
(iv) risk management.
Who we act for
5.3(a) When a client engages us as their insurance brokers and/or risk advisers, we have a duty to act on their behalf and in their best interests.
Revised wording
When a client engages us as their insurance brokers and/or risk advisers, we have a duty to act on their behalf and in their best interests. This duty is the same as the best interest duty outlined in s961B of the Corporations Act 2001 (Cth).
5.3(d) Where there may be a conflict of interest, we will contact the client in a timely manner and clearly inform them that there may be a conflict of interest. Where there is or is likely to be a conflict of interest, we will engage with the client regarding steps to manage the conflict of interest in their best interests and we may only continue to act on behalf of the client with their express written consent.
Revised wording
Where there may be a conflict of interest, we will contact the client in a timely manner and clearly inform them that there may be a conflict of interest. Where there is or is likely to be a conflict of interest, we will engage with the client regarding steps to manage the conflict of interest in their best interests and we may only continue to act on behalf of the client with their consent.
5.3(e) We will periodically review our procedures to ensure that they are effective in identifying and avoiding conflicts of interest and are not creating conflicts.
Revised wording
We will periodically review our policies and procedures to ensure that they are effective in identifying and managing conflicts of interest and are not creating unmanageable conflicts.
6.1(c) This information will be provided at the same time and by the same means as our advice to our client.
Revised wording
This information will be provided at the same time and by the same means as our advice to our client. Where no advice has been provided the information must be provided to the client prior to payment.
6.1 (d) Change: new provision inserted
If the amount of commission is not known at the time of the provision of advice an estimate needs to be provided and the actual amount must be provided as soon as reasonably practicable.
6.1(d) Change: Rename current 6.1(d) to 6.1(e)
6.2 (b) When acting on a client’s behalf we will not receive any contingent remuneration including volume-based commissions or profit-sharing arrangements or preferential remuneration such as (overrider commissions) from an insurer.
Revised wording
When acting on a client’s behalf we will not receive any contingent remuneration including volume-based commissions or profit-sharing arrangements or preferential remuneration (such as overrider commissions from an insurer).
6.5 We will periodically review our remuneration arrangements to ensure they are not creating conflicts of interest.
Revised wording
We will periodically review our remuneration arrangements to ensure they are not creating unmanageable conflicts of interest.
Definitions
Complaint: An expression of dissatisfaction made to a Code Subscriber related to its products, services, staff, or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.
The definition of complaint used in the current 2022 Code varies slightly from the definition used by ASIC in RG 271. To ensure consistency across the industry and assist members with reporting obligations NIBA proposes to amend the definition in the Code to align with the ASIC definition.
Revised wording
A complaint is an expression of dissatisfaction made to or about an organisation, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.
Section 6.1
As previously advised, whilst we have requested feedback in relation to Section 6.1, no further changes will be made until after the release of the Quality of Advice Review. However, we have updated the wording of the Code and the Implementation Guide to reflect the effective date for Section 6.1 to be 1 November 2023.
Through the feedback process we continue to gain insights into areas where brokers require more clarity, as such we will continue to add to the Implementation Guide. If you have any questions about these changes, please email info@niba.com.au