Commissions for advisers on private medical insurance (PMI) sales are unlikely to be abolished by the Financial Conduct Authority (FCA) anytime soon but brokers need to be very clear with customers around how they earn their money, a compliance expert has warned.
Branko Bjelobaba, issued the warning while addressing a question from the floor at the Association of Medical Insurers and Intermediaries (AMII) annual general meeting.
While broker commission has appeared to be a major focus for the FCA over the past year, when asked whether PMI commission would be abolished, Bjelobaba told delegates “not for a long time”.
“The FCA had an opportunity to do this in 2018 – so the rules we have at the moment is you don’t have to disclose your commission unless asked,” Bjelobaba said.
“You do need to explain to your client how you earn your money. That should be pretty clear,” he added.
Consequently, Bjelobaba advised brokers to write commission disclosure in a “really obvious” place such as within the first couple of pages of documentation rather than hidden where a magnifying glass would be needed to read it.
Otherwise, he warned they could be liable for referral to the regulator – something he had done himself in another general insurance sector.
“I look for that,” he added.
“Don’t deal with me unless you want lots of questions. I love my daughter’s motor insurance policy. I emailed the broker 12 questions. They didn’t reply so I grassed them up to the FCA.”