The disclosure of commissions on insurance and investment business. Until the mid 1990s this was covered by a ‘maximum commissions agreement’ in the UK, resulting in the practice of soft disclosure. This meant that there was no need to make customers explicitly aware of commissions and charges, provided they were within the maximum limits set and the customer did not specifically ask for detailed information. In 1991, the Office of Fair Trading objected that this practice was uncompetitive and amounted to an illegal price-fixing cartel. It was recommended that the industry move to a practice of hard disclosure. Initially, this took the form of disclosing the percentage of the commission charge rather than a strict monetary disclosure. But since 1995 there has been a practice of hard disclosure of the monetary value of commissions, expenses, charges and early surrender value to customers at the point of purchase.
Subjects: Business and Management.