Market moves closer to commissions solution.
The FSA has privately agreed that it will not make commission disclosure compulsory and is on the verge of hammering out a market-led solution with the ABI and Biba.
Negotiations are now centring on whether brokers should have to verbally inform clients that they have the right to ask how much commission the broker is earning.
The ABI is also in discussions with the FSA about whether a broker owned by an insurer should have to disclose that fact.
A source said: “The discussion at the ABI has moved away from commission disclosure to disclosure of a broker’s status where it is wholly owned by another insurance company, or even partly owned.
“That was split into partly owned with a place on the board, or partly owned with no place on the board.
“The ABI members agreed that that is where we should be having the discussion with FSA.
“Trilateral discussions with the FSA, Biba and the ABI have got to a place where it looks as if the FSA is quite happy with guidance, rather than statutory, which is good news.
“The residual concern is that it would like to see the broker have an oral discussion with the client. I think Biba is not totally happy with that, so the problem in terms of statute seems to be diminishing, but in terms of disclosure under a guidance regime, it is still there.”
An FSA spokesman said: “We are in ongoing discussions with all parties and are due to publish a feedback statement in the next quarter.”
He added that an industry-led solution was a “very desirable way forward”.
A Biba spokesman said it was in negotiations and was not able to comment.