Danger that customers will be confused by too much information

The case for mandatory, up-front commission disclosure has yet to be made, the IIB has told the European Commission.

IIB Head of Technical Services Ann Peel, responding to the EC’s consultation on its revision to the Insurance Mediation Directive (IMD), said that the institute supported the development of an ‘on request’ remuneration disclosure regime across Europe along the lines of the UK’s existing arrangements.

She said: “Under UK agency law (and FSA rules for commercial customers) brokers are already obliged to disclose the amount of their remuneration on the client’s request, but very few buyers appear to be interested in anything but the overall price of their insurance.

“For remuneration disclosure to work across the whole panoply of distribution channels in the EU, the legislators and/or state regulators have to agree on a workable definition. The EC could struggle to come up with a foolproof way to make information about remuneration comparable across all distribution channels. Unless there is a level playing field, additional disclosures could confuse customers rather than inform them.”

“There is a danger that presenting customers with a complex suite of disclosures at the point of sale might be counterproductive.”

She added that in addition to an ‘on request’ system, guidance could be issued to firms on handling and disclosing conflicts of interest.