Conflict management key to disclosure outcome

Much has been said about hard disclosure in this edition. To recap, some company market insurers are aggressively lobbying for it, the London market is even more hell bent on it, as are the brokers under a three-line whip from New York. Distributors with underwriting agencies do not care as they could shunt money around to make it look right to the regulator, which leaves the provincial broker as hard disclosures' main opponent.

At Professional Broking's October roadshows the Financial Services Authority, in the guise of Andrew Honey, moved to pacify brokers, saying that a number of measures would have had to fail before hard disclosure became reality and that a consultation process would be undertaken to ensure the conclusion was 'appropriate'. Sounds good, however, given the experience of previous FSA consultations and the tide of opposition, how much faith can the provincial broker have for a vote in their favour on commission disclosure?

Some view John Tiner's insistence on this issue as a crusade and he does appear to have two personal aims for the sector. First is to rid the market of a 'deal now, detail later' culture by achieving full contract certainty, and the second is total transparency around remuneration. The latter ignores from the fact that customers are not asking for it, which for many makes it a non-issue.

The FSA has limited resources and, as individuals in the UK plunge further into debt than ever before, due in no small part to banks irresponsible lending policies, and with the situation in Payment Protection Insurance now so bad the Office of Fair Trading is involved, it is utterly bizarre that the FSA is trying to fix things that are not broken when the financial landscape is littered with the bodies of failed customers. However, there are many voices whispering in Tiner's ear about disclosure and, I may be wrong, but none of them appear to be doing it for the love of the customer.

However, a practical way forward and to achieve a good result on commission, this must surely hinge on brokers evidencing their acknowledgement and management of the conflict of interest that commission presents in the way suggested by the British Insurance Brokers' Association. While there is a gap between BIBA's solution and an acceptable situation for the FSA, this is probably down to brokers. It is a cliche to say the answer is in the market's hands but while ever brokers write to the FSA saying 'we have no conflicts of interest', illustrating they have missed the point about commission, the solution already on the table will remain seriously undermined.