Biba bullish as it hands FSA final draft of commission paper

Biba is confident the FSA will approve its solution on commission transparency after submitting the final draft of its guidance paper to the regulator.

The FSA ruled out mandatory commission disclosure last December, opting instead for an industry-led solution.

Biba’s final draft, called Industry Guidance, sets out the details of the steps brokers should take during a transaction with clients.

The Biba advice places more emphasis on the customers’ right to ask a broker what commission they earn. Retail brokers will also be asked to tell clients if they work with a chain of intermediaries – but they will not have to name the firms involved.

The document does not introduce any new rules.

The guidance also includes a one-page template that brokers can follow to ensure they are meeting the FSA’s requirements.

Steve White, Biba’s head of compliance and training, said he remained positive that the guidance was exactly what the FSA was looking for.

“We have given the FSA a formal presentation,” he said.

“From the time the FSA published the feedback statement at the end of December our intentions have not changed. We remain fairly confident.”

The FSA originally planned to respond to the market-led proposals in the first quarter of this year, but White said he was unsure how long it would take to get Industry Guidance approved.

“One of the hurdles that Industry Guidance normally has to get over is the consumer panel, but as this is not relevant to consumers we are unclear over how the FSA will handle this,” he added.

An FSA spokesman confirmed that it had received the Biba paper and said the document was being reviewed. He could not say when an announcement would be made.

After the guidance is in place, the FSA will use the next 18 months to two years to assess whether brokers are meeting its objectives. It will also test brokers on the changes they have made to business processes and systems.