Addendum to the Consumer Protection Code 2012 New Provision 4.58A – Commission Summary

As all Brokers Ireland Members will be aware, the Addendum to the Consumer Protection Code 2012 (CPC) published by the Central Bank in September 2019, introduced new Provision 4.58A, which provides as follows:

“4.58A An intermediary must make available in its public offices or on its website, in a manner that is easily accessible to consumers, a summary of the details of all arrangements for any fee, commission, other reward or remuneration paid or provided to the intermediary which it has agreed with product producers. Where an intermediary operates a website, it must publish the summary on its website. The summary must include a minimum of the following: a) an indication of the agreed amount or percentage of any fee, commission, other reward or remuneration where the payment is made to the intermediary on this basis; b) an explanation of the arrangement including details on the type of fee, commission, other reward or remuneration paid or provided to the intermediary, for example, sales commission or trail commission, and details affecting the fee, commission, other reward or remuneration paid or provided to the intermediary, for example, clawback provisions; c) details of any other agreed fees, administrative costs, or non-monetary benefits under such arrangements, including any benefits, which are not related to the intermediary’s individual sales.

The summary referred to in provision 4.58A shall be referred to in this email as “the commission summary”. Brokers should note, however, the precise terms of the provision, which applies to all remuneration paid or provided to Brokers by product producers.

The commission summary is to include details of all arrangements for “any fee, commission, other rewards or remuneration paid or provided to the intermediary which it has agreed with product producers”. It is to include an indication of the agreed amount/percentage paid to the intermediary for each product the intermediary makes available to consumers and explanation of the arrangement. Any non-monetary benefits that the intermediary receives from the product producers must also be included.

Brokers Ireland have been liaising with key stakeholders, including the CBI, product providers and software companies, to ensure that we and our Members understand the implications of the changes to the CPC and how our Members should implement them. We wish to ensure that insofar as they can, product providers and insurers assist our Members by providing the information needed in order to meet these new obligations. We are endeavouring to achieve for our Members an industry standard in respect of the format and structure of the proposed commission summary, to ensure that both the provision of data to our Members and the display of information to consumers is made as seamless as possible.

The summary referenced in the Addendum is not to be taken as meaning either a single document, or indeed a paper document. The CBI has advised Brokers Ireland that the summary may be set up as a webpage, with links displaying the commission rates available to the Broker for each product the Broker sells from a particular provider. The summary does not have to be a single document with all providers’ commission summary arrangements contained within.

Brokers Ireland acknowledge and appreciate the input and support from insurers and other product providers to their broking partners to assist them in meeting the requirements of the CPC.

What Brokers need to do – The website
Brokers Ireland suggest that Brokers arrange for the creation of a new webpage entitled Commission Summary. Within this page, will be a cover note, with an explanation of the types of commission arrangements available to the Broker. Brokers Ireland will provide a sample wording for a cover note, which will explain the kinds of commission arrangements available to Brokers and this will be issued to Brokers shortly. Brokers may delete from this any commission arrangements that do not apply to them. Also, if Brokers are in receipt of non-monetary benefits from any of the providers, these must be listed here too. The CBI has advised Brokers Ireland that the commission summary may contain the standard or market rates available to the Broker from the provider. Individual arrangements (such as overrides that do not conflict with the provisions of the CPC) may be addressed in the cover note.

Brokers should prepare a list of the insurers/providers from which they hold an appointment and once the information on remuneration is received from the insurer/provider, it should then be linked on the webpage to the insurer/provider name. The commission summary is to be accessible and comprehensible to the consumers it is intended to assist.

For those Members who do not have a website, the CBI has confirmed to Brokers Ireland that it is permissible for Brokers to have the commission summary available to consumers in soft copy on a PC in their office. There is no requirement that the commission summary be available as a printed paper document if it may be accessed by consumers in soft copy.

The commission summary must be made available from 31 March 2020.

Financial Brokers

Life offices
Meetings with the life offices have indicated a preference for a standardised format to send provider-specific information to Brokers. The standardised format is being drafted and once it has been agreed, Brokers Ireland will send an email to members, with a template cover document and an example of the standardised format. Following this, each life office will directly communicate with their Broker panel, giving them their standard commission structure in the agreed format.

Other Financial product providers
Brokers Ireland has also reached out to a number of other financial product providers and are awaiting a response.

The following providers have been in contact with Brokers Ireland and are working on assisting members in meeting their requirements; Blackbee, BCP, Conexim, New Court, Quilter, Wealth Options, Mercer, Quintas Wealth mgt. ltd, & ITC.

Note: Brokers are not required to include commission structures for non-regulated products within the summary document.

Lenders
Brokers Ireland have been liaising with the Banking and Payments Federation of Ireland, in relation to lenders providing their commission structures to brokers, prior to the 31st of March 2020 and we will keep you updated on this.

CRM/IT Providers
Brokers Ireland have also spoke to CRM/IT Providers on this requirement and are aware that some of these providers will be offering solutions to their clients in this regard.

If you have a query on any of the Financial Broker requirements please contact Rachel McGovern on
01 6613067 / rachel@brokersireland.ie

Insurance Brokers

Brokers Ireland has communicated with the product providers in the attached list and has received the responses indicated. Insurers and product providers have been asked for the information needed to enable Members to comply with their obligations, ideally in editable format.

Engagement with product providers is continuing and further updates will be provided to our Members.

Brokers Ireland has also reached out to Applied and Open GI and will continue engagement with them.
It is possible that the back-office systems of each may be capable of producing a document that will meet the CBI requirements and this is being explored.

If you have a query on any of the Insurance Broker requirements, please contact Cathie Shannon on
01 6613067 / cathie@brokersireland.ie