In a surprise move, the disclosure of commission payments has not been included in the latest draft regulation on the selling of life assurance. The regulation will act as an amendment to the Sale of Goods and Supply of Services Act 1980. Previous drafts had included commission disclosure and it had been widely expected that the Minister of State at the Department of Enterprise, Trade and Employment, Mr Noel Tracey, would maintain it in his long-awaited order. Commission disclosure has been a controversial issue because of the serious, negative effect commissions can have on savings fund values in the early years of a policy.

Much of the controversy surrounding the sale of insurance products from the early 1980s has centred on the levels of commission paid to sales intermediaries, who have themselves strongly opposed the disclosure of commission, in isolation from all the other charges.

A notice issued by the Department states: "On consideration, the Minister has decided that it is not essential to have a discrete disclosure regime for insurance intermediaries/sales employees once the overall charges are available to policyholders and prospective policyholders." The tabular statement plus the figure for reduction in yield - the effect of the charge on surrender values - "together with the fundamental information and prominent `health warnings' should serve the interests of both suppliers of insurance and purchasers of insurance/investment products".

Full disclosure of all charges is compulsory in Britain and insurance industry officials here were surprised to hear from the Irish Insurance Federation (IIF) that "Schedule 2", the part of the regulation which details the way commission and other charges should be disclosed to clients, should be deleted from their existing copies of the draft order.

If the draft order as it now stands is enacted, anyone who buys a life assurance policy will receive at the point of sale a cash figure representing all charges and the effect these charge would have on the surrender value of the fund for each of the first five years and every fifth year thereafter.

The IIF, on behalf of its members, had publicly opposed the separate disclosure of all the policy charges on the grounds that the size of the commission and/or company set up charges were irrelevant so long as the client knew the size of the total charge.

In its representations, the IIF also argued that there was considerable difficulty in determining a fair formula for the calculation of commission since some companies pay their sales force by salary rather than commission.

The Consumer Association of Ireland, which has had discussions with the Minister on this matter, and is in favour of full disclosure of all costs associated with life assurance policies, is seeking an urgent meeting to discuss the latest development. A spokesman declined to make any other comment until after the meeting.