Regulator rules on ‘broker’ name, commission and agencies
Irish brokers could have to reveal commission and insurers be banned from ceasing agency agreements due to lack of business under new plans from the Irish Financial Regulator.
In a report published yesterday the regulator recommended:
- New criteria to be used by intermediaries when they use the terms ‘broker’ and ‘independent’
- The ending of the practice whereby insurance companies terminate appointments with intermediaries based solely on target levels of new business
- New disclosure requirements in relation to services provided
- Obligation on non-life insurance intermediaries to provide remuneration details on request*
- Legislative changes to simplify the operation of the intermediary market.
The report also highlights areas that have the potential to create conflicts of interest, such as target-related arrangements, the importance of providing relevant information to customers, and the obligation to act in the best interests of customers and the integrity of the market, and outlines the provisions of the Consumer Protection Code that must be complied with in these situations.
The regulator’s consumer director, Mary O’Dea, said: “Intermediaries play an important part in assisting and advising consumers in getting the most suitable product for their needs. The recommendations contained in the report are aimed at creating more transparency in the market, which in turn will benefit people that use the services provided by brokers. This simplification of the categorisation of intermediaries and the increased transparency in the insurance intermediary market, will make it easier for consumers to understand the nature of the advice and extent of services provided by the broker”.
Most of the recommendations in the Report will be implemented through the Financial Regulator’s statutory Consumer Protection Code, which will be reviewed in 2009. Industry bodies will inform members of the pending changes and broker representative bodies have indicated their intention to provide guidance for members, the regulator said.
