The FSA warned brokers and insurers to check undisclosed commission agreements for conflicts of interest.
In a speech designed to clarify the FSA's rules on transparency, FSA chief executive John Tiner said commission disclosure was not mandatory for intermediaries.
But, he warned, where inducements were not disclosed a conflict of interest could arise between the client and intermediary.
The FSA has written to trade bodies giving clarification of the rules on inducements.
It advises intermediaries to ensure they do not structure inducements so as to influence the placement of business in a way that is contrary to the customer's interest.
Insurers were also warned they are in danger of breaching the rules if they knowingly structure inducements to create a conflict of interest between the intermediary and the client.
In a speech at the City Forum lunch on Tuesday, Tiner said although there was no reason for all inducements to be disclosed, insurers "may choose to go beyond the disclosure rules.
"A firm must not offer or accept an inducement that is likely to conflict materially with its duty to customers," he warned.