NIBA makes adjustments to broker code for enhanced transparency in commissions

Berita, Bisnis162 Dilihat

After consulting with its members and considering the final report of the Quality of Advice Review, the National Insurance Brokers Association (NIBA) has implemented new regulations on remuneration disclosure specifically aimed at retail clients.

In April of last year, the 2022 Insurance Brokers Code of Practice underwent amendments to broaden the remuneration disclosure mandate, encompassing not only retail clients but also individual and small business clients.

Section 6.1 of the code stipulated that when acting on behalf of an individual or a small business client, the broker is required to provide them with comprehensive information regarding any remuneration, including commissions, or other benefits expected to be received as a result of providing Covered Services.

The alteration faced opposition from certain NIBA members due to concerns about increased complexity and potential impact on systems and processes. Consequently, the implementation of section 6.1 was postponed until November of this year.

NIBA has officially announced that the revised wording will be adjusted to specifically address retail clients, aligning with the recommendations outlined in the Quality of Advice Review report.

As per the note shared with members, the revised version of section 6.1 will now state: “If the client is a retail client, we will furnish them with information regarding any remuneration (including commissions) or other benefits we will or anticipate receiving in connection with the provision of Covered Services.”

Retail clients can include small businesses that are acquiring specific retail products. NIBA’s note explains that this differs from the existing requirement, which mandates brokers to disclose commissions to all individual and small business clients, irrespective of whether they are classified as retail or wholesale clients.

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“This modification aligns the code with the commission disclosure requirements endorsed by the Quality of Advice Review, which have subsequently been approved by the government.”

“This adjustment ensures alignment with the government’s proposal, thereby avoiding extra administrative complexities for brokers and minimizing confusion among their clients.”

According to NIBA CEO Phil Kewin, the consultation with members resulted in an “overwhelming response” indicating that the inclusion of small businesses had introduced unnecessary complexity with limited benefits.

Mr. Kewin stated that the Quality of Advice Review report clearly emphasizes the importance of safeguarding retail clients. Consequently, a revised version of the code will be promptly disseminated to reflect this change.

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