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Ban on banks and insurers giving brokers golf trips and match tickets

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Diarmuid Kelly from Brokers Ireland

Diarmuid Kelly from Brokers Ireland

Diarmuid Kelly from Brokers Ireland

Mortgage, insurance and other financial brokers will be banned from accepting hospitality such as golf trips and match tickets from banks and insurers under new rules aimed at better protecting consumers.

Brokers will be obliged to disclose the commission they stand to make when a consumer buys a financial product, and brokers who do receive commissions will no longer be able to describe themselves as "independent" financial advisers.

From March 31 only financial brokers who charge an upfront fee when selling a product such as a mortgage or insurance policy will be allowed to use the term "independent".

The Central Bank stopped short of measures introduced in the UK, where financial advisers can no longer collect commission payments when they recommend pension and investment products, following the so-called retail distribution review there.

Brokers Ireland, which represents 1,250 broker firms, said there is little evidence commission is an issue of concern for consumers.

"The reality is that consumers overwhelmingly choose that their broker be remunerated by commission, rather than by fees," said Brokers Ireland CEO Diarmuid Kelly.

The changes are included in a package of new rules to be included under the Consumer Protection Code 2012, which will come into force from March 31.

As well as the ban on hospitality, any other non-monetary benefits brokers receive as commission must "demonstrably enhance the quality of the service to the consumer", the Central Bank said.

The ban on golf and match tickets is being brought in because such benefits are designed to influence an intermediary to place business with a particular provider rather than to benefit consumers, said the Central Bank.

Under the new rules, all financial intermediaries will have to publish details of commissions they receive from so-called product producers - such as banks, insurance firms and underwriters - on their website.

Brokers say some disclosure requirements are already in place, including for life assurance policies, and the commission details have been available on request for other products.

Some forms of commission will be banned altogether.

"Certain criteria must be met in order for commission to be acceptable and commission linked to targets that do not consider a consumer's best interests will be deemed a conflict of interest and will be prohibited," said the Central Bank.

The Central Bank's director of consumer protection, GrĂ¡inne McEvoy, said prices should be clear.

"These amendments to the Consumer Protection Code will reduce the potential for bias on the part of financial intermediaries and will provide consumers with access to more information about how intermediaries are paid," she said.

"Consumers will also be able to have confidence that when they receive advice that is marketed as being independent, that this advice is truly independent."

The biggest change for brokers is that they will no longer be allowed to describe themselves as independent advisers if they are paid commission.

The term has traditionally been used to distinguish brokers who sell products from a range of companies from so-called tied agents.

Irish Independent