MEPs still deciding how fee transparency would work
A key vote that would force brokers to tell clients how much commission they make has been delayed by European political wrangling.
The Economic and Monetary Affairs (ECON) Committee responsible for coming up with the final wording of the Insurance Mediation Directive (IMD) II has pushed back a vote on the final proposals to December.
The proposals are likely to force compulsory commission disclosure by 2015. The European Commission, which drafted the proposals, said doing so would protect consumers and help restore trust to the financial services market.
The commission said: “The collapse in consumer confidence during the financial crisis has also given new prominence to consumer protection issues.
“The goal is to upgrade consumer protection in the insurance sector by creating common standards across insurance sales and ensuring proper advice.”
An ECON member said the committee was still hammering out a compromise on the section which will determine how much information brokers will have to disclose about fees and commission.
The IMD could also force price comparison sites to disclose how much they make from referrals.
Biba has warned compulsory commission disclosure would increase the regulatory cost burden faced by brokers to satisfy a rule for which there is little or no consumer demand.
Executive director Graeme Trudgill said: “We still like the original IMD. If this one doesn’t go through we’d be happy to continue with what we currently have.
“But it is still on the agenda so we have to do everything we can to influence what does occur.”
But MEP Catherine Stihler, a member of ECON, said: “I think it will be a bad move for the sector and consumers if the vote is again postponed.
“This report is intended to restore that trust by creating transparency and disclosure.”
If the proposals are passed at the ECON meeting on 2 December they will then be voted on by the European Parliament in January, and could be approved or rejected and sent back to the committee.
If approved, the report will be entered into further negotiations between the European Parliament, Council and Commission.
After these negotiations, which could take months, the parliament would have a final vote on the proposals and they would then be enforced as law by the commission.