Broker Commission Disclosure - Tougher Stance

The FSA will have to tread carefully on commission disclosure to avoid disadvantaging UK brokers, argue Elborne Mitchell's Tim Brentnall and Alexandra Booth.

Until recently, it seemed the Financial Services Authority (FSA) was set against mandatory commission disclosure by brokers to commercial customers; but their recent discussion paper signals a possible change of heart.

While previously the FSA's view was that the benefits of mandatory disclosure were not sufficiently high to justify the cost to the industry, the regulator is now suggesting that imposing yet more onerous requirements could increase the benefit enough to make the cost worthwhile. The focus has widened from disclosure of commissions earned by a customer-facing broker on a particular piece of business to include commissions earned by every broker in a chain and on contingent commissions.