Industry guidance – a quick “how to” guide

Broker Network is busy helping its Members to meet the Industry Guidance for commercial customers. The key areas involved include transparency, disclosure and conflicts of interest. Here’s a quick look at what our Compliance specialists are recommending.

The FSA have set out five clear outcomes that they expect brokers to achieve:

1. Commercial customers should have clear and more comparable information about the commissions brokers receive.
    
2. Commercial customers should have clear and more comparable information about the
   services brokers provide.
    
3. Commercial customers should have clear information about the capacity in which brokers
   act when arranging business.
    
4. Commercial customers should be alerted to their right to request commission information.
    
5. Commercial customers should be made aware of the involvement of any intermediary
   brokers use in a chain when arranging their insurances.

In essence, the FSA wants the customer to understand the extent of services that brokers provide and the capacity in which they act, whether there is a chain of brokers involved in placing the risk and of course be made aware of their right to request commission information.

To satisfy the Industry Guidance, we have established how we can firstly tweak our existing documentation that many of our Members use and secondly, our commercial sales process without too much pain.

We have recommended that our Members follow Industry Guidance as whilst it is not mandatory, in the event of a visit or thematic review, the FSA would be looking for clear evidence of commitment to transparency, conflict of interest and commercial commission disclosure. Without a measured framework this could prove difficult to provide and increase the risk of disciplinary action on a firm.

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