Explainer – How should I pay for financial products when using a broker

The role of a retail intermediary – commonly known as an insurance broker or financial broker – is to help consumers find and buy financial products, including insurance, mortgages and investment products.

Brokers search the market on behalf of consumers to find suitable products from different providers.

When you use a broker, you are paying for their advice and expertise to find the right financial product for you. This differs from going directly to a bank, insurance firm or investment firm, who will usually only discuss their own products.

A financial broker can typically offer advice and arrange the purchase of a broad array of financial products. These include:

• Insurance (covering life and protection products)
• Investments (including funds, shares, and bonds whether through insurance providers or investment firms)
• Pensions and personal retirement savings accounts (PRSAs)
• Savings accounts and deposit products
• Mortgages.

While an insurance broker can also offer life and protection products, they typically advise and arrange non-life insurance-related products, including but not limited to:

• Personal lines insurance, e.g. motor, home, travel
• Commercial lines insurance, e.g. business insurance
• Health insurance.
  

Whenever you purchase or renew any of these policies through a regulated broker, your money is protected by strict rules in relation to Client Premium Accounts. These rules are set by Central Bank of Ireland under the Consumer Protection Code 2025, and by safeguards in the European Union (Insurance Distribution) Regulations 2018.

Financial and insurance brokers must keep your insurance premiums in a segregated account known as a Client Premium Account before passing this money on to your provider.

The Client Premium Account is:

• Separate from the broker’s own business account
• Clearly designated as a “Client Premium Account”
• Used only for holding client premiums and processing related transactions, such as dealing with claims.

Any money within the account is protected by the relevant provider with whom the policy is to be taken out.

Consumers usually make payments for their non-life insurance policies to the insurance broker, and these payments are received by the insurance provider via the broker's client premium account. However, for financial or investment products, it is generally customary to make payments directly to the product provider (e.g. bank or  investment firm) who issues the policy.

When buying a financial or investment product through a broker, here are some things to watch out for:

• All financial or insurance brokers should be able to facilitate non-cash payments into their designated client premium accounts or directly to the product provider’s account.
  
  
• All payments should be made either to a designated client premium account or the product provider’s account. Never make a payment into a financial or insurance broker’s personal bank account or any business account that is not clearly identified as a client premium account. If in doubt, ask the broker for evidence that the relevant account is marked “Client Premium Account”.
  
  
• It is advisable to make payments using direct debit, bank card, or bank transfer, as these methods provide a clear record of the transaction.
  
  
• For investment products, it is advisable to only make payments for investment products directly to the product provider.

Remember, where payments are provided to a regulated entity, they must provide you with an appropriate receipt, and you should retain this receipt as proof of payment.

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