Addendum to the Consumer Protection Code 2019 – Additional Guidance to Provision 4.58A
Tue Aug 10 2021
The Addendum to the Consumer Protection Code 2012 (CPC), published by the Central Bank in September 2019, introduced a new provision 4.58A which requires that intermediaries make available on their website, for consumers, a summary of “any fee, commission, other reward or remuneration paid or provided” to them which they have agreed with their product producers. This provision took effect from March 2020.
To aid regulated entities in their interpretation and understanding of the provisions of the Consumer Protection Code, the Central Bank published additional guidance which is available to view here. The sections relevant to Provision 4.58A is available to read here.
The guidance states that an intermediary’s level of commission must be displayed as an individual number as opposed to a range, where possible. When an intermediary’s level of commission depends on individual circumstances and can only be displayed as a range, the intermediary must explain the arrangement in the summary and the basis on which the level of commission within the range is decided should 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 needs to specify which of the factors is relevant in each case.
Where members take ‘House Views’ 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 with list of 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 guidance also clarifies that if an intermediary operates a website, the information must be made available on the website. 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 operate 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 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, it is crucial that all commission information is available in line with the requirements set out in Provision 4.58A.
If members do not have a website, they must make the commission arrangements summary available in their office. This does not have to be in paper copy, but it does have to be readily available e.g. on a computer or laptop.
In order to assist members, Brokers Ireland has updated its template remuneration document for office or website (for ease of reference, changes highlighted in red) which is available in the compliance section of the Brokers Ireland members website in the following location: Compliance Manual/Remuneration Documents. A house view template document is also available in the same location.
If you have any further queries on this, please contact compliance@brokersireland.ie or call Brokers Ireland Compliance Unit on 01-661 3067.
