The Central Bank will be imposing a series of tougher statutory obligations on insurance intermediaries, designed to provide greater protection for their clients. The new regulatory regime comes into effect on November 1st and is expected to encourage broader practice of fee-based rather than commission-based service.

Under the new regime, brokers will be required to provide clients with a written record of the decision making process before recommending a transaction. This "Statement of Suitability" must cover the reasons why the purchase of a particular financial product is considered to be in the best interests of the client. It is intended to act as a safeguard against mis-selling.

Mr Diarmuid Kelly, chief executive of the Professional Irish Brokers Association, said the changeover to the new regime would be a challenging time for brokers but he said he did not foresee any major problems. "It may take a while to work out the lines of demarcation but we will be assisting members to adapt to the new regulatory requirements."

Mr Paul Lynch, chief executive of the Irish Brokers Association (IBA), welcomed the publication of the regulatory requirements and said the IBA was pleased that many of its proposed modifications were adopted.

The retail intermediary sector is now regulated by the Central Bank and 32 staff have been assigned to a new department to look after the area. The Bank is issuing a handbook, with details of supervisory requirements, to 1,500 restricted activity investment product intermediaries and 850 authorised advisers that have applied to the Bank for authorisation. The handbook lays out the statutory obligations for all aspects of intermediaries' operations. It includes a code of conduct, general supervisory requirements, advertising and premium handling requirements, status disclosure and books and records requirements.

Restricted intermediaries are authorised to receive and transmit orders in investment and insurance products to product producers from whom they hold letters of appointment. They can only provide advice on the financial instruments available from those product producers.

Authorised advisers can provide similar services but are authorised to advise on a more expansive range of products, without having to hold a letter of appointment. All intermediaries will have a statutory obligation to take all reasonable steps to ensure they act in the best interests of their clients.

The Central Bank says it will be carrying out on-site inspections in big and small firms to ensure all statutory regulations are being complied with. According to a spokesman, the Bank intends to build up a database on the intermediary sector.

Under the new regulatory regime, each firm will be required to draw up its terms of business and ensure each client receives a copy prior to providing services to that client. The Bank is also introducing a requirement on firms to display a Statement of Authorised Status, issued by the Bank, in the public area of their offices.

In response to objections from some intermediaries, the Bank has softened its line on unsolicited calls to clients. From November 1st a visit or telephone call may be made to a potential private client who has signed a statement giving the firm permission to make such contact, within the previous six months, or where the intermediary has received a referral from an existing private client.