Risk & Compliance

Active commission transparency and rules on automated advice

Date:February 14, 2024

After much debate on the usefulness and necessity of additional rules regarding transparency on commission in non-life insurance, these are now finally entering into force. From 1 July 2024, advisers or intermediaries will have to actively inform customers about the amount of commission they receive from the provider prior to the provision of services. This applies to non-life insurance policies taken out on or after that date.

Challenges and fine-grained averaging

The timing of informing brings challenges. If, at that time, it is not yet known which insurance product with which coverage will be taken out, no clarity can yet be given on the commission to be received. The legislator has solved this by introducing the concept of fine-grained averaging. Advisers and intermediaries are expected to use the most accurate average possible based on average commissions for similar products with similar risk coverages. This should be a narrow range, expressed in amounts. If during the advice or mediation process this indication changes significantly then consumers should be informed of this.

Solution to market failure?

Practice shows that consumers do not actively ask about the commission an adviser or intermediary receives from the provider. That is why active commission transparency has been advocated. The question is what market failure will be solved by introducing this active commission transparency. Transparency on commission is of course to be welcomed in a general sense. To what extent this commission transparency makes a positive contribution to a good conversation about service provision remains to be seen. Because of the difference in services and the assumed empowerment and knowledge, these transparency rules do not apply to non-life insurance for the business market.

Automated advice

From 1 July 2024, there will also be additional requirements for automated advice. The AFM has paid attention to online services more often. The regulator’s Agenda for 2024 also extensively mentions the opportunities and risks of digitalisation. Because automated systems can generate a lot of advice in a short time and errors in automation have a major impact, additional requirements apply. At that point, automated advice will be subject to the same requirements as physical advice.

Periodic examination and professional competence

The following quality requirements must ensure that such advice meets the same requirements as advice issued by a natural person. At least one person within the organisation must be designated as responsible for the system and the advice. That person must meet the professional competence requirements that apply to advisors. The company must determine in advance which target group is suitable for the automated advice regarding the financial product. Prior to and during the provision of services, a competent employee must periodically examine whether the advice provided suits the client. If an error is discovered, the service should be stopped immediately. It may be resumed when the error is demonstrably corrected. Customers affected by incorrect advice should be informed accordingly.


If you have any questions about these new rules or need help implementing them, please contact us. We will be happy to help.