Majority of brokers provide clients with fees information

More than half of brokers provide clients with information about fees and the majority have established “widespread good practice” that facilitates a culture of compliance and ensure good customer outcomes, according to the Insurance Brokers Code Compliance Committee (IBCCC).

About 76% have procedures to identify breaches or potential issues, 67% use checklists to ensure they provide clients with the necessary information and 65% conducted an external compliance audit within the past three years to identify any gaps or weaknesses in compliance processes.

IBCCC released the findings today as part of its Own Motion Inquiry report, based on responses from 415 subscribers to the Insurance Brokers Code of Practice about company culture.

“It was pleasing to see that all subscribers reported having at least one of the eight processes or procedures listed in the questionnaire for encouraging good behaviour and improving Code compliance,” the IBCCC report says.

“This, along with the many examples of good practice, demonstrates that all subscribers are capable of implementing processes that improve their compliance.”

According to the report, about 57% of Code subscribers said they provide clients with information about cancellations and fees in plain English, with actual disclosures of any brokerage or commissions.

In the most comprehensive examples, subscribers reported including the information in detail on client invoices, with a full breakdown of premiums, fees and commissions.

By contrast, other subscribers revealed that they provided information about fees and commissions to clients as an attachment to the invoice, usually as a Statement of Advice (SOA), a General Advice Warning, a Financial Services Guide (FSG).

“Providing clients with information about fees, commissions and other important policy advice in a single document – particularly one that is not the main invoice – is not considered to be good practice,” the IBCCC report says.

“All subscribers should adopt a similar approach to sharing information with clients. Subscribers should provide information about fees and commissions, as well as terms and conditions, in plain English and across various communication channels, including in conversations and meetings with clients.”

Fees and commissions disclosure are set to emerge as a key discussion topic in coming months after the Quality of Advice Review proposed requiring brokers to have written consent from clients to be paid commissions.

The Review has recommended keeping commissions exempt from the ban on conflicted remuneration and will submit its final report to the Federal Government by December 16.

Click here for the report.