Commission disclosure provisions commence

Today marks the final step in the implementation of the 2022 Insurance Brokers Code of Practice, with the remuneration disclosure obligations outlined in section 6.1 coming into effect from today.  

The provisions, which were first announced in March 2022, have been subject to a 20-month implementation period, to allow brokers time to integrate the Code requirements into the systems and processes.  

 What does the Code require?  

Section 6.1 of the Code requires that if the client is a Retail Client (as defined in the Corporations Act) and the broker is acting on their behalf, the broker must provide them with information about any remuneration or other benefits they will or expect to receive as a result of providing Covered Services.   

 This information must include:   

1. the dollar amount of commission you will or expect to receive in providing Covered Services;   
2. any non-monetary remunerations you receive from insurers as a result of providing Covered Services;   
3. any fees payable by the client in relation to your services to them; and   
4. whether you intend to keep any portion of the commission or service fee if the policy is cancelled before it is due to expire.   

 What if I don’t know the amount of commission?  

If the exact figure is unknown at the time of providing advice an estimate should be provided, with the actual amount communicated to the client as soon as reasonably practicable. The estimate may take the form of a percentage or dollar amount, depending on the information available to the broker at the time.  

Next Steps  

Brokers should ensure they are using and referring to the 1 November 2023 version of the Code. This includes updating any links on websites or email signatures.  

We appreciate that Subscribers are likely to have questions as these changes are rolled out and brokers begin to have conversations with their clients. We encourage all members to review the updated member implementation guide available on the NIBA website and to contact NIBA’s Policy and Advocacy Manager if they have any questions about the disclosure obligations or any other part of the Code.