Two consumer advocacy groups have asked the Australian Securities and Investments Commission (ASIC) to investigate what they describe as one of the largest insurance broker conduct matters ever referred to the regulator, alleging the unauthorised appointment of a broker across an estimated 1,000 strata insurance policies.
In a joint media release today, the Australian Consumers Insurance Lobby (ACIL) and the Owners Corporation Network (OCN) said they have lodged a briefing with ASIC asking the regulator to independently determine whether the conduct breaches section 912A of the Corporations Act 2001 (Cth) and Regulatory Guide 181, which govern financial services licensees' obligations to manage conflicts of interest and act in clients' best interests. The groups have not publicly named the broker involved. Insurance Business has reached out to ASIC for comment.
ACIL chair and strata insurance broker Tyrone Shandiman (pictured left), said the size of the referral distinguished it from previous complaints the group has raised with regulators.
"The issues we have asked ASIC to investigate potentially affect more than 1,000 strata insurance policies," Shandiman said. "To our knowledge, this represents one of the largest referrals concerning the conduct of an Australian insurance broker ever made to ASIC."
He said this referral is about asking the corporate regulator to independently determine whether an Australian financial services licensee has complied with its statutory obligations.
The referral follows ACIL's withdrawal, alongside OCN and the Unit Owners Association of Queensland (UOAQ), from consultations on the National Insurance Brokers Association's (NIBA's) reform process for the Insurance Brokers Code of Practice.
"Our recent decision to withdraw from consultations on NIBA's proposed Insurance Brokers Code of Practice marks a fundamental change in our approach," he said. "By referring systemic matters to ASIC, we hope to build an evidence base that supports future regulatory reform, including strengthening ASIC's guidance on conflicts of interest under Regulatory Guide 181."
OCN co-managing director David Glover (pictured right) said owners corporations were entitled to expect that broker appointments were made transparently and without unmanaged conflicts of interest.
"The integrity of the strata insurance market depends upon confidence that broker appointments are made in the interests of owners corporations, not influenced by unmanaged conflicts of interest or related-party arrangements," Glover said.
The referral lands against a backdrop of rising regulatory attention on strata broking. The Insurance Brokers Code Compliance Committee's (IBCCC's) most recent review of broker-agent arrangements in the strata sector found breaches across the brokers examined, with matters already referred to ASIC and NSW Fair Trading.
