I have been an insurance broker for 35 years and I can categorically state, hand on heart, that I have never once been asked to disclose my commission. Some clients ask if there is a fee charged in addition to the premium quoted and are pleasantly surprised when we say no. When I have voluntarily advised a client of my commission, he expresses astonishment that it is so low.
I do not believe that the public have anything to gain, and are certainly not suffering by not knowing broker commission.
The FSA seems to be listening to a non-existent group of hard done by members of the public. If there is concrete evidence that customers are suffering from non-disclosure of commission (especially from small independent brokers like us) I would certainly like to see it. My view is that it does not exist.
Brokers are constantly fighting off unfair competition from direct insurers, insurers with direct arms and aggregators and, like motorists, seem to be an easy and, until now, a quiet target.
I have no objection to the job being done by the FSA per se, although there may be a few out there who do. But I firmly believe it should be made aware that the insurance buying public are not at risk from receiving sound professional advice and buying policies from small independent insurance brokers like ourselves, and would not benefit from knowing the commission I am earning.
As a broker bound by Treating Customers Fairly principles, and conflicts of interest requirements already in the FSA rulebook, the commission amount I earn is, quite frankly, irrelevant to the advice and assistance I give my clients.
I believe insurance buyers should be made aware of commission when they buy insurance from a source other than a broker, for example a bank or building society. We have often been able to compete most favourably with such organisations for buildings and contents insurance. And, surprise, surprise, our much lower quotation is with the same insurer that they are with through their bank or building society. This is because they are being charged a high fee, or the commission is excessive. Customers of banks or building societies should be able to make a fair choice and disclosure of commission would allow this.
A previous correspondent of yours stated he would like to see brokers charge fees like accountants and lawyers as that would make us more professional (Insurance Times, 10 April). Heaven help us if we behaved like accountants and lawyers, charging exhorbitant fees for every piece of work or every telephone call and letter. What better way to drive clients away from brokers.
Michael Ross
Director
Frank L Ross (Insurance Brokers)
