The Association of Mortgage Intermediaries (AMI) has called on advisers to be more transparent with customers about how they are paid and for insurers to be more flexible with commission models for intermediaries.
The call follows the release of AMI research which shows half of consumers think commission is the main motivation for advisers raising protection insurance.
Only 23% thought it was to ensure their client was financially protected.
Presenting the results, AMI chairman Andrew Montlake (pictured) told a webinar audience that while commission should not be a dirty word, consumers need help in understanding the cost of advice compared to the benefit received.
“Perhaps we finally need greater transparency and better explanations around how indemnity commission works in a way consumers can understand,” Montlake said.
“We need to see a shift in providers giving advisers choice on commission – the flexibility to switch commission between indemnity and non-indemnity on a case-by-case basis rather than a firm choosing between one or the other.”
According to fellow speaker Jeff Woods, head of intermediary development at Legal & General Retail, the whole protection sector needs to work at building consumer trust.
“We all – providers and advisers alike – need to work on building consumer trust as 50% still think advisers are motivated purely by commission over ensuring they get the most suitable protection,” he said.
“And unfortunately, they still don’t believe the claims stats providers produce.
“We all need to take that challenge head on and work at improving that situation.”