Brokers accepting contingent commissions are dragging industry down, says UK retail chief
Tensions ran high at the CII conference after Toby Foster, chief executive of Marsh UK Retail, slammed brokers for failing to grasp the importance of transparency in the post-Spitzer world.
Foster told an audience of brokers: "We continually shoot ourselves in the foot because there are still brokers who believe contingent commissions and undisclosed earnings are acceptable."
The suggestion hit a raw nerve with delegates, who spoke of Foster "pointing the finger".
Anger mounted as Foster continued: "There are all too many who persist in these practices and it continues to drag the industry down. The industry at large remains committed to an unclear and complex business model."
Mutterings could be heard from the floor about the "impertinence" of Foster's speech.
"They were the ones caught bid-rigging," said one angry broker. "How dare he lecture us about contingent commissions."
Foster was forced to defend his stance when one delegate questioned his authority to give advice to an industry ready to address the problems caused by contingent commissions.
Foster said the FSA had ruled out making the practice illegal. He added that there were several brokers who were bound to contingent commissions through contractual arrangements.
"I have no right to lecture anybody," Foster admitted. "I have experienced life close to the edge recently. Based on my experience... transparency is critical."