FSA accepts industry solution on disclosure

See also: Biba welcomes FSA's disclosure outcome

The Financial Services Authority has agreed an industry-led solution on commission disclosure but has given the market until 2011 to prove it can work.

In a statement, the FSA said: "Our concern about wholesale commission disclosure, transparency and the management of conflicts of interest in commercial general insurance is longstanding. The evidence from our recent work suggests that although intermediaries are largely managing conflicts of interest appropriately, more should be done to improve transparency of their remuneration, services and capacity.

"We have been in discussion with the Association of British Insurers, the London Market Insurance Brokers’ Committee and the British Insurance Brokers’ Association about the outcomes needed to improve transparency for customers. Their response has been a commitment to develop industry guidance and to promote it amongst intermediaries.

"We welcome the industry’s commitment and view it is a positive and significant step forward. Our response is to give firms, aided by their industry guidance, a window of opportunity to achieve the customer outcomes. In 2010/11, we will assess whether they have been met.

"The industry has indicated its intention to submit parts of its guidance for endorsement by us as confirmed FSA guidance and we look forward to this.”

Edward Harley, head of retail policy and financial promotions, said: "We have long been concerned that buyers of commercial insurance can be poorly informed about their intermediaries' remuneration, services and capacity. To address this, further work and dialogue with the industry has led to the development of a set of outcomes for commercial customers. If these are achieved, transparency in this market will be improved leaving commercial customers better able to access information that is important to them.

We welcome the industry's positive engagement and commitment. Their intention is for us to confirm parts of the guidance they are developing and we look forward to discussing this with them."

To view the FSA's Feedback Statement, click here