Move follows concerns about clarity of policyholder information

The FSA is to examine how brokers care for clients post sale, it was revealed this week.

The move comes after the regulator uncovered serious misgivings about the quality of care offered to clients post sale.

Sarah Wilson, sector leader for insurance, said: "Too often post-sale information fails to pass the 'clear, fair and not misleading' test."

On mandatory commission disclosure she added: "We very much support the concept of annual statements being sent to with-profits policyholders.

"But we are concerned that their potential value is diminished as in many cases what is actually sent is difficult, if not impossible, for the average policyholder to understand."

Insurers were told to consider whether they are supplying enough post-sale information.

"It seems to us inevitable that product providers should take an interest in the overall quality of their distribution - not by proactively monitoring the behaviour of individual distributors but rather by considering what the aggregate statistics tell them about the quality of sales and (crucially) acting on results," Wilson said.

She urged the industry to fully utilise company proposals to make commissions transparent for major customers.

The regulator also said it had uncovered firms where staff remuneration is dominated by commissions and volume-related incentives. In these firms, said Wilson. "No attempt is being made to consider and manage the resulting conflicts of interest."

' The FSA will look at how distribution networks are expected to evolve, the regulator said.

The aim is to better understand how regulation influences the insurance markets and its economic stability.

"We believe that there are serious challenges to be faced in the retail intermediaries sector, from growing economic and market pressures as well as from complying with regulatory standards," said John Tiner, FSA chief executive, at the Airmic conference last week.