The Institute of Insurance Brokers (IIB) has come out strongly in response to a questionnaire from the UK regulator, the Financial Services Authority (FSA), on commission disclosure.

On the subject of market practices, the IIB says the existing FSA rules – requiring brokers to treat their customers fairly and manage any conflict of interest – are adequate, especially as the FSA has stated a desire to move away from prescriptive rules in favour of principles-based regulation.

The IIB says the disclosure of broker remuneration in exact financial terms relating to individual clients would be virtually impossible to achieve.

“On many commercial combined (multi-section) policies commission is ‘variable’ across the sections, such as material damage, business interruption, employer’s liability and public liability,” the response says.

“The broker will only find out the exact amount when the insurer’s account is received, which could be several months after inception of the policy.”

The institute says it cannot think of any tangible benefits customers would obtain as a result of mandatory disclosure of commission and other broker earnings. “All that most broker clients are concerned about is the bottom line price.”

It would be concerned should the FSA attempt from its own philosophical perspective to redesign how the UK market functions.

It also warns against people outside the industry, including customers, persuading the FSA to make sweeping changes that could result in commercial damage, disruption and loss of employment.

“Because of the competitive forces at play, the overwhelming majority of customers obtain excellent value with regard to their insurance arrangements.”