Sales staff must tell their clients how much commission they get on many insurance and pension-linked financial products. However, PEPs, critical illness cover, mortgage repayment protection and permanent health insurance are excluded from the new regime. Unit trusts are expected to come under similar rules later this year.
SIB's new rules require insurance companies to say how much of a client's premiums are swallowed up in charges throughout a policy's life. Until now, they simply gave the industry average, thereby allowing expensive companies to avoid close scrutiny of their charges.
A third of savers' premium payments were routinely skimmed off by insurers. The new regime is expected to force them to reduce costs.
Clients will now be told in writing why a policy is suited to their particular needs and how much they will get back if they surrender it early or transfer it into another scheme.
Although the charges will have to relate specifically to products, for a few months more information need only be based on a typical customer. But from 1 August companies will have to give clients details of charges based on their own situations.Reuse content