The Consumers' Association wants to see the reintroduction of the maximum commission agreement.
The MCA was abandoned in 1988 after the Office of Fair Trading ruled it was significantly anti-competitive but CA senior policy adviser Mick McAteer believes there needs to be some sort of control on charges to get the industry to move away from commission.
He claims that many life companies would like to move away from commission-driven models but are unwilling to be the first to make the move.
McAteer accepts that an MCA is unlikely to be reintroduced because of the OFT ruling. He suggests that the industry could look at moving towards a model along the lines of the one used at John Lewis, where staff are rewarded for overall performance rather than getting bonuses for sales.
The CA is planning to launch a corporate governance code for the industry which will look at introducing remuneration strategies which reward sales staff for treating customers fairly, not just for selling high volumes of products.
A consultation period on the code is due to start in July.
McAteer says: “There needs to be some sort of control on charges to get the industry to move away from commission.Ideally, I would like to see a control on commission between firms and distributors but this is unlikely because of politics.”