Insurance brokers may have to disclose their commission

Insurance brokers may have to disclose their commission rates to clients if plans from the Financial Services Authority are implemented.

If brokers’ don’t improve their handling of conflicts of interest under the Treating Customers Fairly policy, rules will be enforced by the FSA.

This threat comes in the form of a letter to insurance brokers published last week. The FSA says it will assess whether there is a case to amend its policy for commercial customers to introduce the compulsory disclosure of commission and, if so, whether to make this binding on both intermediaries and insurance companies.

James Rodea, commercial director at Cluttons, says: “Most organisations realise the client is king so will always treat them well and fairly. It’s a good idea to have a principle-based policy but parameters are needed.

“Naming and shaming and making people disclose commission upfront though is not necessarily the right way to go about it.”

The FSA has given insurance brokers until January 20 to come up with a policy to cover conflicts of interest.