The Institute of Insurance Brokers (IIB) has critcised the FSA's plan to introduce commission disclosure for brokers transacting new business.
The Institute of Insurance Brokers (IIB) has criticised the FSA's plan to introduce commission disclosure for brokers transacting new business.
Publishing its response to the FSA's consultation paper, CP160: Insurance selling and administration, the IIB said the issue "needs looking at very carefully" by the FSA.
The IIB said it is a complex issue as shown by the example of Super Direct Motor Insurance. The IIB claimed the insurer told customers, "we do not pay commission to middlemen". However the IIB claimed Super Direct generates 35% of its premiums from commissions.
The IIB response also criticised FSA plans to exclude private consumers from its product disclosure rules. The brokers' body said the proposals could lead to private consumers being forced into playing the a game of "Take Your Pick".
An IIB statement said: "Advice on product suitability might only in future be offered to high net worth personal clients. Brokers may be forced to cease giving advice themselves to 'Mr Average'."
The IIB said it was also opposed to FSA plans for polarisation. It claimed that FSA plans to allow banks and retailers to generate multiple-product non-advised sales, are flawed because, "it has far more to do with their bottom line profit than customer care".
An IIB statement said: "We are alarmed that under current proposals general insurance may be forced down the same road, because it would raise a multitude of technical issues."
The IIB also raised concerns over FSA plans not to force intermediaries to give advice "if no policies are deemed adequate".
The IIB said: "To have a regulatory requirement that no recommendation should be made at all unless a proposed contract of insurance meets all of the client's requirements would be unrealistic and unworkable."
With regards to complaints handling, the IIB raised concerns over FSA plans for the Financial Ombudsman Service (FOS).
An IIB statement said: "As currently formulated [it] is not at all suitable for the general insurance intermediary market and if applied would lead to enormous problems and widespread discontent amongst intermediaries generally."
