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ABI aims to head off commission attack by Sandler

The ABI is examining propo-sals for a disclosure regime based on benchmarked or average commission in a bid to seize the initiative before the Sandler review forces the industry&#39s hand.

Papers seen by Money Marketing from the ABI&#39s life insurance committee suggest “the commission offered by various providers on the same product might be disclosed, perhaps alongside an industry benchmark or average”.

To address accusations of product and provider bias, the ABI intends to design a model point-of-sale document which would explain what commission pays for and the choices on commission and fees.

The ABI is determined to get ahead of the game by setting up a working party to figure out a “disclosure-first” commission strategy in time to sway the Sandler review and the FSA.

The papers say: “This approach should be fully explored before the debate moves on. The timing is critical if we are to influence the outcome of the Sandler review and the FSA&#39s consultation on polarisation.”

The ABI says it “must seek to raise the quality of the debate around commission to prevent regulatory knee-jerk reactions”.

Industry sources believe the proposals are part of designs within the ABI to move towards fees and that these proposals are to manage that changeover.

The paper says the ABI&#39s objective is to “offer concrete and visible improvements in transparency that will exert commercial pressures for appropriate market change”.

Clerical Medical pensions strategy manager Nigel Stammers says: “The question is how is the benchmark set – is it an average of commis-sion or is it a standard set by the industry?

“Rather than having an officially imposed maximum commission agreement, this could be workable as an arrangement agreed by the industry. It might temper the excesses of some providers but it does not address the whole spectrum.”

ABI spokesman Malcolm Tarling says: “With all the reviews going on and Sandler looking at commission, this is an attempt to get the industry on the front foot and take the lead to explore ways that commission can be restructured.”


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