Financial brokers banned from accepting free sporting and social tickets

Some 3,000 brokers selling mortgages, insurance, or market investments in Ireland will be banned from accepting free sporting and social tickets from financial firms under a crackdown by the Central Bank.

It is part of the regulator’s small package of new consumer protection rules that aim to outlaw abuses and make the fees and commissions that brokers charge more transparent.

“Under the new rules, the Central Bank will require intermediaries to publish details of the commissions they receive from product producers on their website. In addition, the Central Bank will no longer permit intermediaries to describe themselves and their regulated activities as ‘independent’ where they accept and retain commission in circumstances where advice is provided,” said the Central Bank.

The Central Bank had requested and received submissions from the industry and the new rules which are due to be applied from next March will likely cause little surprise or prove to be severely onerous.

Mortgage brokers who are paid by banks a percentage commission on the amount of the loans they sell had feared the new rules would cap their payments and they are likely to be relieved that the Central Bank has not imposed a ceiling.

The rules are also likely to be welcomed by consumer advocates as going some way to rebuild trust in Irish financial services.

But the banning of brokers from accepting free hospitality from banks and insurers will catch most attention, with the regulator stressing that the ban includes free hospitality such as golf trips and sporting event tickets.

“It is important that consumers are clear about the price they are paying for financial services,” said Gráinne McEvoy, the Central Bank’s director of consumer protection.

These new rules will provide much-needed transparency around commission payments, allowing consumers to see what commission payments their financial advisors are getting for the products they are recommending.

“We will not allow hospitality such as golf trips and sporting event tickets as we consider such benefits are designed to influence an intermediary to place business with a particular provider rather than to provide any direct benefits to consumers,” she said.