Pursuant to provision 4.58A of the Central Bank’s Addendum to the Consumer Protection Code 2012, published 2019, all intermediaries, must make available in their public offices, or on their website if they have one, a summary of the details of all arrangements for any fee, commission, other reward or remuneration provided to the intermediary which it has agreed with its product producers.
This will include commissions arrangements, profit share arrangements, preferred provider rates, and clawbacks.
This requirement applies to all intermediaries that deal directly with consumers.
Where possible, the intermediary’s level of commission must be displayed as a number rather than a range or max figure. When an intermediary’s level of commission depends on individual circumstances and can only be displayed as a range or max, the intermediary must explain the arrangement in the summary and the basis on which the level of commission within the range is decided must be disclosed, e.g., intermediary’s discretion, whether the level of commission is negotiable, length of time of the policy, length of investment period, etc. In that regard, the disclosure must specify which of the factors is relevant in respect of each case.
Where members take a ‘house view’ in relation to commission (these are commission levels or ranges you choose to implement per product line and across different providers if appropriate), you are required to outline the specified amount or range. If that approach is not taken, continue with provider ranges and provide clients and list factors that can affect these ranges. Note where you use a range in a house view, you must also list the factors that determine the specific rate of commission finally chosen.
The firm may also be in receipt of other fees, administrative costs, or non-monetary benefits such as attendance at product provider seminars, and assistance with advertising/branding. These must be listed in the Summary also.
The Summary must be brought to the attention of the consumer before conclusion of the contract, and evidence of this must be maintained by the intermediary.
Product Providers are no longer permitted to pay for intermediaries’ attendance at entertainment events, such as golf outings, or pay for their attendance at industry dinners etc.
Displaying the Summary on your website
If an intermediary operates a website, the information must be made available on the website. The Central Bank have advised, in this regard, intermediaries must ensure that it is easy for consumers to locate the information on their website. This means that it must not be necessary for consumers to access multiple links or to conduct a search on the website in order to find the information.
When the information is displayed via a link, the link should be accessible on the home page. The link provided on the homepage must be logical and not misleading so that a consumer knows that this link will provide the relevant information.
The Central Bank have also advised that the commission arrangements summary may be presented in a format that allows the information to be filtered by product producer and product. This could be achieved by using drop down fields on the webpage so that consumers can access the information they require.
However, for some members using drop down options may not be possible, and this is acceptable also. Regardless of the method of disclosing your commission arrangement summary, it is crucial that all commission information is made available in line with the requirements set out in Provision 4.58A.
Disclosing the information without a website (on softcopy)
In circumstances where an intermediary does not operate a website, the intermediary is permitted to make the information available to the consumer in either softcopy form (i.e. on a desktop computer or laptop in its public office) or hard copy form (i.e. a print-out of all commission arrangements available).
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