New digital commission disclosure and consent obligations
Following the recent Johnson, Wrench and Hopcraft Court of Appeal judgment we have decided to put in place new disclosure and commission consent arrangements to mitigate potential future risks for us as a lender and to support brokers in mitigating their own risks. We’re taking steps to ensure that customers receive full disclosure of the arrangements and provide consent to commission payments, as outlined below.
The new disclosures will ensure customers are aware of the following:
- The relationship between us and the broker
- The existence of commission
- The nature of the commission
- The amount of commission the broker will receive
- The method we use to calculate the commission amount
Our new digital commission disclosure and consent (CDC) solution provides a simple method to ensure customers receive full disclosure and provide consent to the commission the broker will receive and supports brokers in meeting their obligations.
What does this mean for me?
We have developed a digital Commission Disclosure and Consent (CDC) solution for new business, that provides commission disclosure and obtains customer consent to the broker earning a commission, without creating disruption to existing journeys. This is applicable to personal and commercial lines business, and we remain committed to ensuring that all our broker partners are providing our required commission disclosures and obtaining consent from the customer.
What is the approach for renewals and MTAs?
With regards to renewals, we’re initially taking the following actions for both personal and commercial lines business:
- We’ll be introducing commission disclosure within the welcome pack that is sent to the customer following their renewal.
- We require that brokers disclose commission within their customer renewal documentation.
- When applying for a new credit agreement, the digital CDC solution will obtain commission consent from customers to cover future renewals, mid-term adjustments (MTAs) and any subsequent additional lending under this one credit agreement.