ACCC Strengthens Position Against Broker Commissions

1

The issue stems from the practice where broker commissions are often based on premium amounts, potentially discouraging brokers from pursuing more cost-effective coverage or options that pay lower or no commissions for clients. Despite full disclosure of such remuneration to consumers, the ACCC argues that the inherent conflict remains problematic.

ACCC Chair Gina Cass-Gottlieb, in the submission, underlined that while some consumers might resist an upfront fee akin to commissions, the transition challenges away from conflicted remuneration models do not justify retaining exemptions permitting them. This echoes a broader reform ethos initiated by the federal government in 2023, stipulating that brokers must secure client consent to receive commissions when providing personal advice.

NSW Fair Trading, in its independent review of strata sector practices, has also highlighted the need for the broking code of practice to enhance commission practices. Commissioner Natasha Mann advocates for bolstered disclosure obligations, promoting transparency in brokers' remuneration and ownership structures, coupled with robust compliance monitoring mechanisms.

Further perspectives include those from consultant John Trowbridge, who supports the continuation of commissions but emphasizes the necessity for brokers to transparently disclose all commission-related earnings. Trowbridge also suggests that the National Insurance Brokers Association offer guidelines to elucidate conflict management and fiduciary responsibilities within the industry.

The WA Small Business Development Corporation has expressed support for widening the disclosure requirements scope, advocating for the inclusion of small businesses. By aligning with the Australian Financial Complaints Authority rules, small enterprises, often with limited resources, stand to benefit from an expanded definition that enhances clarity on financial incentives influencing broker services.

The industry awaits further developments from the review, led by Phil Khoury, as its submission deadline approaches.

Published:Friday, 2nd May 2025
Source: Paige Estritori

Share this news item:

Insurance News

Clear

ClearView Transitions to Pure-Play Life Insurance, Emphasizes IFA Ties 14 May 2025: Paige Estritori ClearView, a publicly-listed insurer, has reaffirmed its commitment as a 'pure play life insurance company' following its strategic exit from the wealth management sector. This transition, finalized in March 2025, completes a multi-year effort pivoting the company towards becoming a technologically advanced life insurance firm. - read more

Life Insurance Prevails as a Financial Priority Despite Economic Strains 13 May 2025: Paige Estritori Amid ongoing economic challenges, Australians continue to prioritise life insurance, often at the expense of other budgetary items such as holidays, entertainment, and even groceries. This trend is highlighted in an annual survey conducted by NobleOak, which reveals a noticeable rise in life insurance and income protection policies. - read more

Call for Stricter Timelines on Insurance Claims and Renewals 06 May 2025: Paige Estritori The Insurance Brokers Code Compliance Committee is advocating for significant changes to improve transparency and clarity in their industry standards, amidst ongoing reviews of the National Insurance Brokers Association (NIBA) code. This call to action coincides with the recent closure of feedback collection from stakeholders, setting the stage for a draft report expected next month. - read more

Insurers Under Scrutiny for Response to Alfred Flood Claims 05 May 2025: Paige Estritori In a recent development, Queensland MP David Lee has raised concerns about how insurance companies are addressing claims following the devastating floods caused by Ex-Tropical Cyclone Alfred. Businesses in Hervey Bay, a region heavily impacted by the floods, report facing significant hurdles in having their damage claims recognized. - read more

AFCA Rules Against Engine Theft Coverage in Motor Policy Dispute 04 May 2025: Paige Estritori An applicant's attempt to claim insurance coverage after the theft of an engine designated for his 1993 Nissan Skyline has been denied. Despite holding a comprehensive motor policy with IAG, the insured's claim was rejected after multiple engines were stolen in a brazen ram-raid at his vehicle repairer's workshop in November 2023, prompting an appeal to the Australian Financial Complaints Authority (AFCA). - read more