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Insurance

Volume 694: debated on Thursday 26 July 2007

asked Her Majesty's Government:

Whether they will support the extension of the Financial Services Authority's recommendation for compulsory commission disclosure by independent financial advisers to include general and business insurance distributors, including brokers; and [HL4994]

Whether they will recommend that the Financial Services Authority should require the compulsory disclosure, to the small business consumer, of any or all contingent commissions, including profit and volume-related incentives, between insurance providers and insurance distributors. [HL4995]

The Financial Services Authority (FSA) is responsible for the regulation of the selling of insurance products. FSA rules already require insurance intermediaries to disclose commission if requested by a commercial client.

The FSA is currently conducting a review of commission disclosure in the wholesale and commercial general insurance market. This work will include both an objective market failure analysis and a corresponding cost-benefit analysis, covering both transparency to the customer and to the market. The FSA plans to report its findings in the final quarter of 2007. The FSA will consider whether regulatory intervention is the best way forward if, and only if, both the market failure and cost-benefit analyses tests are met and the insurance market has not come forward with any appropriate industry-led solutions.

The European Commission’s current business insurance sector inquiry is also looking at, among other things, the structure, function and remuneration of insurance distribution channels. The final report of the sector inquiry is expected in September 2007.