The Insurance Brokers Code of Practice - an update David Duffield, Industry Representative Insurance Brokers Code Compliance Committee September 2018

I will cover - The Insurance Brokers Code of Practice The Insurance Brokers Code Compliance Committee Code activities over past 12 months Tip of the Month 2017 Annual Compliance Statement IBCCC Annual Review 2017-18 ‘Our impact’, 20 August 2018 Own Motion Inquiry ‘Professionalism and Competency’, 1 August 2018 Own Motion Inquiry ‘Internal Dispute Resolution process’ Review of the Code

Code = good industry practice A Code is a set of promises by you in your profession as insurance broker towards your client By adopting this Code, you agree to comply with the standards and have its performance monitored. Company framework and culture Code Contracts & charters Law Good industry practice Codes are about continual improvement and doing more than the bare minimum. Minimum standards & expected conduct

Code Compliance Committee (Australian Financial Complaints Authority) “We support insurance brokers to achieve good practice in service and advice to their clients.” The Committee Code Compliance Committee Independent Chairperson Michael Gill Industry Representative David Duffield Consumer Representative Julia Davis Code Team (Australian Financial Complaints Authority) Sally Davis General Manager Code Compliance & Monitoring Daniela Kirchlinde Compliance Manager Investigations Manager Compliance Analyst NIBA Industry Liaison Group Charter Code

Code activities over past 12 months Tip of the Month – monthly publication in Insurance Adviser 2017 Annual Compliance Statement – self-reported breach and complaints data Own Motion Inquiry ‘Professionalism and Competency’ - published on 1 August 2018 IBCCC Annual Review 2017-18 ‘Our impact’ – published on 20 August 2018 Own Motion Inquiry ‘Internal Dispute Resolution process’ – follow up on inquiry February 2017 – findings to be published in Oct/Nov 2018

Tip of the Month Monthly articles in the Insurance Adviser to: provide guidance and share good industry practice for standards of practice and services provided by the insurance broking industry engage stakeholders to actively share information and about industry practice promote understanding of the Committee’s operations and the benefits of the Code among Code subscribers and regulators enhance the visibility of the work of the Committee to the broader community Main issues raised: professionalism and competency effective communication meaningful record keeping breach and complaints recording and reporting

2017 Annual Compliance Statement (ACS) central component of the Committee’s monitoring work information about Code compliance frameworks and breach and complaints reporting and monitoring, as well as organisations’ overall culture of compliance and examples of good practice benchmarks organisations’ compliance with the Code reports on current and emerging issues in Code compliance to the industry and wider community establishes areas of highest priority for Committee’s future monitoring work Code subscribers self-reported: 1,359 Code breaches 52% Buying insurance (Serv. St. 5) 23% Compliance with the law (Serv. St. 1) 1,047 internal dispute resolution complaints 20% concerning small business policies 58% concerning service issues

IBCCC Annual Review 2017-18 ‘Our impact’ provides improved feedback to the industry and consumer advocates regarding outcomes and learnings from Code compliance monitoring activities improved collection and analysis of Code subscribers’ self-reported Code breach and complaints data enhanced transparency of Code compliance monitoring and reporting data Focus on: Professionalism’ How insurance brokers complied with the Code What the Committee achieved Case study and examples Self-reported breach and complaints data Published 20 August 2018

OMI ‘Professionalism and Competency’ recent public scrutiny of the financial services sector has brought the theme of professionalism into sharp focus How do insurance brokers understand professionalism in the context of the Code and apply this within their businesses formal education provides a solid foundation for professional practice but alone does not give staff the skills, knowledge and behaviours needed to provide services competently competency defined as a person’s skills, knowledge, attitudes, behaviours, qualifications and training vast majority of Code subscribers have indicated that they take competency and professionalism seriously 280 organisations representing more than 15,000 staff in client-facing, management and support roles. Published 1 August 2018

professionalism + competency = good practice Findings Insurance brokers defined professionalism as Education — having a sound educational qualification Training and development — having a commitment to and participating in continuing professional development Client focus — treating clients honestly and fairly and acting in their best interests Continual improvement — striving to exceed minimum legal and regulatory standards; implementing and observing the Code, and often embracing standards beyond the Code Ethics — adopting and applying high standards of ethics and integrity professionalism + competency = good practice

Recommendations Incorporate the Code into company structure and strategy. Common organizational understanding of competency focused on meeting client expectations. Assess and monitor staff performance based on skills, knowledge, attitude and behavior. Encourage and develop leadership for all size of business and clients. Keep good records of training undertaken. Monitor staff performance, including through client feedback. Competency-based training is equally important as educational qualifications. Exceed ASIC minimum training standards. Train all staff in Code obligations.

Follow-up own motion inquiry ‘IDR process’ Follow up on recommendations issued by the Committee in an own motion inquiry into compliance service standard 10 of the Code published in February 2017. ‘We will ensure that we have an internal complaints and disputes handling process that meets the Code Complaints and Dispute process standards’ Assessing whether organisations had adopted the Committee’s 2017 recommendations and whether compliance had improved. “It is not about complaint standard, it is about service standard.” Preliminary findings: Processes are in place but need improvement. Not just following procedures, but fine tuned to support staff. Improvements needed to deal with clients who need assistance. Importance of written procedures regardless of size of organisation. Independently review and test your procedures. To be published Oct/Nov 2018

Review of the Code ‘NIBA will arrange for the Code to be reviewed every three years’ (page 6 of the Code). Committee is looking forward to working with NIBA in the Code review. Codes are about continual improvement and doing more than the bare minimum. Enhancing professionalism and competency. Embedding good industry practice into daily operations. Protecting vulnerable consumers. Differentiating ‘complaints’ from ‘breach’ by taking a holistic approach.

Where to find guidance Own Motion Inquiries Check out http://www.fos.org.au/publications/code-compliance-publications/ for guidance, fact sheets and examples of Code breaches and good industry practice. Check out https://www.niba.com.au/codeofpractice/index.cfm for a copy of the Code and NIBA’s guidance notes. Own Motion Inquiries Professionalism and Competency, Aug 2018 Internal Dispute Resolution, Feb 2017 Website Review, Mar 2015 For breach examples – Annual Review 2017-18 ‘Our impact’, Aug 2018 Code breach classifications (see Guidance Note 1: Classification, Reporting and Remediation of Breaches, September 2015) For feedback or comments, please email dkirchlinde@codecompliance.org.au