We look at the proposed introduction of a code of conduct for brokers and what it will really mean for the brokers’ market.
Brokers’ duties have come into sharp focus over the last few years. That focus has caused the British Insurance Brokers’ Institute (BIBA) to consider the introduction of a new code of conduct for its members. While the proposal is still at an early stage, it has already sparked considerable debate within the insurance sector. So how likely is it that the proposal will come into force and, if it does, what will this mean for brokers?
The 2012 review
In May 2012 BIBA, which represents the interests of insurance brokers, intermediaries and customers, selected Deloitte to undertake an independent review of its operations. The decision to carry out the review was taken following BIBA’s merger with the Institute of Insurance Brokers and a full membership survey.
After extensive consultations with members, industry and key broker stakeholders including politicians and regulators, Deloitte identified several key areas for BIBA to review and strengthen.
These included the introduction of a code of conduct for brokers.
Code of Conduct
BIBA has confirmed that introducing a code of conduct will be given serious consideration ahead of a planned consultation process with regional members.
The consultation process will involve a series of regional meetings with members to discuss Deloitte’s recommendations and decide whether the code of conduct is necessary before plans for official action are revealed.
However, the BIBA 2013 Manifesto highlights the Association’s commitment to developing a members’ based principle code and reiterates its support of the Chartered Insurance Institute’s (CII) Code of Ethics. The CII requires its members to comply with its code and all relevant laws and regulations, to act with the highest ethical standards and integrity, to act in the best interests of each client, to provide a high standard of service and to treat people fairly.
Consequently, all the indicators so far suggest that BIBA is in support of the proposal and may look to the CII’s existing code for guidance.
The way ahead
It is difficult to predict at this early stage what impact the BIBA code of conduct will have if and when it is implemented. In common with other professional codes of ethics (such as that regulating the solicitors’ profession), it is hoped that it will promote higher ethical and business standards in the profession as well as define bad practice. It is also hoped that it will improve the standard of learning, training and development in the profession generally.
However, there is already growing concern in some corners as to whether the code of conduct, if introduced, will have any meaningful effect on the brokers’ market as a whole, bearing in mind that it could only apply to BIBA members. Even then, policing a code may not be straightforward given that BIBA represents firms not members.
Another issue that will need to be tackled is the need for consistency between the new code and the rules and the guidance that already govern the way in which brokers work. Similarly, there is a danger that firms that sign up to the code might be said to be assuming a higher duty of care to their clients than those that do not.
While most will undoubtedly support the good intentions behind BIBA’s initiative, the devil (as always) will be in the detail and BIBA’s members will undoubtedly want to see exactly what is being proposed before committing themselves to a new code.