Home FCA Handbook ICOBS ICOBS 4 ICOBS 4.3 Remuneration disclosure
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ICOBS 4.3 Remuneration disclosure

Remuneration disclosure: insurance intermediaries

01/10/2018R

In good time before the conclusion of the initial contract of insurance and, if necessary, on its amendment or renewal an insurance intermediary must provide the customer with information:

  1. (1)

    on the nature of the remuneration received in relation to the contract of insurance:

  2. (2)

    about whether in relation to the contract it works on the basis of:

    1. (a)

      a fee, that is remuneration paid directly by the customer; or

    2. (b)

      a commission of any kind, that is the remuneration included in the premium; or

    3. (c)

      any other type of remuneration, including an economic benefit of any kind offered or given in connection with the contract; or

    4. (d)

      on the basis of a combination of any type of remuneration set out above in (a), (b) and (c).

[Note: article 19(1)(d) and (e) of the IDD]

Remuneration disclosure: insurers

01/10/2018R

In good time before the conclusion of a contract of insurance, an insurance undertaking must provide its customer with information on the nature of the remuneration received by its employees in relation to the contract of insurance.

[Note: article 19(4) of the IDD]

Remuneration disclosure: general

01/10/2018R

The remuneration referred to in this section includes remuneration that is not guaranteed or which is contingent on meeting certain targets.

01/10/2018G

The information required to be disclosed by ICOBS 4.3.-7R and ICOBS 4.3.-6R includes the type of remuneration and, taking into account the clear, fair and not misleading rule (ICOBS 2.2.2R), should also include the source of the remuneration.

01/10/2018G

When considering what information to provide about the remuneration, a firm should include all remuneration which the insurance intermediary or the employee of an insurance undertaking receives, or may receive in relation to the distribution of the contract of insurance. This includes remuneration:

  1. (1)

    provided indirectly by the insurer or another firm within the distribution chain; or

  2. (2)

    provided by way of a bonus (whether financial or non-financial) paid to the firm by the insurer or another firm, or provided by the firm to its employees, where this bonus is contingent on the achievement of a target to which the distribution of the particular contract of insurance could contribute. For example, this can include cash bonuses paid for achieving a sales target and additional annual leave for achieving a high customer service score on sales calls, profit share arrangements, overriders or other enhanced commissions.

01/10/2018R

If any payments, other than ongoing premiums and scheduled payments, are made by the customer under the contract of insurance after its conclusion, a firm must make the disclosures under this section, for each such payment.

[Note: articles 19(3) and (5) of the IDD]

01/10/2018G

Examples of the type of payments made are those for mid-term adjustments, administration fees and cancellation fees.

Fee disclosure: additional requirements

01/10/2018R
  1. (1)

    Where a fee is payable, the firm must inform its customer of the amount of the fee.

  2. (2)

    The information in (1) must be given before the customer incurs liability to pay the fee, or before conclusion of the contract of insurance, whichever is earlier.

  3. (3)

    To the extent that it is not possible for an amount to be given, a firm must give the basis for its calculation.

[Note: articles 19(2) and (5) of the IDD]

01/10/2018R

The fee disclosure requirement extends to all such fees that may be charged during the life of a policy.

[Note: article 19(3) of the IDD]