The Registered Insurance Brokers of Ontario has issued guidelines on a new Ontario provision requiring insurance brokers to disclose any conflict of interest associated with any transaction or recommendation.

In a notice issued Friday, RIBO said effective immediately the Code of Conduct under the Registered Insurance Brokers Act has been amended to include paragraph regarding a duty on all brokers to disclose to their clients any facts indicating a conflict or potential conflict of interest of the broker that is associated with a transaction or recommendation.

RIBO has prepared a commentary on this paragraph, including guidelines to assist brokers with compliance with this new provision. The disclosure requirements replace both the majority share ownership restrictions and the related party disclosure requirements, it notes.

“The fundamental premise is that a client is entitled to any information about a broker’s business relationships that pertain to a transaction or recommendation,” it explains. “A business relationship means any direct or indirect interest or benefit that is relevant to the transaction or arises from placing, or the recommendation to place, a contract of insurance with a particular insurer (over another).”

The interest must be sufficient to raise the perception of “influence” over the broker’s “independent” decision making process, in the mind of a reasonable person, in possession of all the facts, it says. “In all cases, we include “individual” conflicts of interest, as well as those of the registered “firm”, as the case may be. In all cases as well, the guidelines are intended to deal with situations where non-disclosure would be detrimental to consumers.”

Among other things, it notes that the possibility that the broker may receive a contingent commission in future ought to be disclosed, in order to achieve full transparency. And, “Similar to the possibility that a broker may receive contingent commission, the possibility that a broker may receive sales incentives ought to be disclosed, in order to achieve full and overt transparency in the transaction. This factor means that if a broker’s relationship with an insurer provides for sales incentives, such as trips, that fact must be disclosed to the client,” it says.

RIBO adds that it will consider that a broker has not complied with the requirement for sales incentive transparency if disclosure is “provided in a manner that is unclear or obscure, for example, disclosure of relevant information that is intentionally buried in a twenty page document that no one will read.”