Distribution remuneration and avoidance of conflicts of interest

(1) The distribution remuneration of insurance undertakings and their employees must not conflict with their duty to act in the best interests of customers. Insurance undertakings may not make arrangements, through distribution remuneration, sales targets, or otherwise, that could create incentives for themselves or for insurance intermediaries to recommend a particular insurance product to a customer even though they could offer another insurance product that better meets the customer's needs.
(2) An insurance undertaking that distributes insurance-based investment products must maintain, on a permanent basis, effective organisational and administrative arrangements for appropriate measures to prevent conflicts of interest from harming customer interests. These arrangements must be appropriate to the activities carried out and the insurance products sold.
(3) Conflicts of interest within the meaning of subsection (2) are those that may arise, in the course of insurance distribution activities, between insurance intermediaries and insurance undertakings themselves, including their management and their employees, or other persons directly or indirectly linked to them by control, and their customers, or between their customers themselves.
(4) Where the organisational or administrative arrangements made by the insurance undertaking under subsection (2) to manage conflicts of interest are not sufficient to ensure, with reasonable confidence, that risks of damage to customer interests are prevented, the insurance undertaking must clearly disclose to the customer the general nature or sources of the conflicts of interest in good time before the conclusion of an insurance contract.
(5) The disclosure of the general nature or sources of conflicts of interest must 1. be made by means of a durable medium, and 2. be sufficiently detailed, having regard to the status of the customer, to enable the customer to make an informed decision about the insurance distribution activities in connection with which the conflict of interest arises.
(6) Insurance undertakings that pay or receive a fee or commission, or grant or receive a non-monetary benefit to or from a party in connection with the distribution of an insurance-based investment product or an ancillary service, where that party is not the customer or a person acting on the customer's behalf, must ensure that the fee, commission, or benefit does not have a detrimental effect on the quality of the relevant service to the customer, and does not impair the insurance undertaking's obligation to act honestly, fairly, and professionally in the best interests of its customers.