A secret report on the disclosure of commission is unlikely to stop industry infighting, according to senior sources.
In July, the ABI initiated a survey of consumers on the disclosure of commissio ...
A secret report on the disclosure of commission is unlikely to stop industry infighting, according to senior sources.
In July, the ABI initiated a survey of consumers on the disclosure of commission. It is understood the results show that the majority of consumers are in favour of commission disclosure.
But opponents of commission disclosure claimed that the questions were skewed to favour this outcome.
One source who has seen the report complained that the questions prompted consumers to consider commission disclosure.
The source said: "If they are left to their own devices, consumers don't think about commission. But the way questions were asked prompted answers regarding commission. It's like asking: "Do you want to know how much a shop makes from selling a bar of chocolate?"
The industry has been arguing about disclosure of commission because it may be included in forthcoming broker regulations in 2004. It is understood that the FSA is in favour of commission disclosure, but that smaller brokers are opposed to its introduction.
The survey concludes that commission disclosure will encourage consumers to shop around. It adds that consumers need a clear definition of what commission is, so that fair comparisons can be made, and that commission levels should be expressed as a percentage and in terms of monetary value.
In the survey, consumers were presented with simulated insurance sales. One sale included commission disclosure. One did not.
The report said that consumers think they are being charged commission when buying insurance. They are unsure about this when buying direct.
Consumers said that they are charged 10% to 20% commission and that commission above 25% is unreasonable. This could be a blow to travel agents and warranty distributors, some of whom charge 50% commission.
It is understood that the research will form a major part of the ABI's written response to the Treasury and
FSA broker regulation consultation documents.
The ABI levied its members 4p per £10,000 of gross written premium to pay consultants for the work.
What the ABI discovered about commission
Once the subject of commission was raised, the majority wanted to know how much they would be paying
