In drafting the disclosure regulations on life assurance policies, the precise format of which cannot be finalised until after the final enactment of the Insurance Bill, prior extensive consul- tations with interested parties have been held, so I am fully aware of the views to which the Deputy referred. The main concern of independent insurance brokers concerns compulsory disclosure of commission levels to consumers. In general, disclosure benefits consumers by enabling them to make an informed and rational choice of products available, thus leading to enhanced competition.
Disclosure of commission should, therefore, exercise a downward pressure on the levels of commission, which are at present not subject to any controls. It should also minimise the scope for mis-selling, including churning of policies. Moreover, disclosure of commission is becoming the norm throughout the financial services sector. Under the Investment Intermediaries Act disclosure of commission is required.
In recognition of the observations from representatives of independent advisers, our Department sought the expert assistance of the Society of Actuaries to frame the disclosure regulations in such a way as to avoid unfairly discriminating between commission disclosure by brokers and other insurance intermediaries, on one hand, and disclosure of remuneration for salesforces employed directly by the insurers themselves or through tied agents such as banks and building societies, on the other. A formula is currently been devised with the co-operation of the Society of Actuaries, which I believe will achieve equivalence of disclosure, as far as is practicable, between the different distribution channels.
