Lesson 4 – When and How Referral Fees Must Be Disclosed

4.1 Timing of the disclosure

Referral-fee information should be provided before the customer:

• Agrees to the introduction;
• Supplies information for referral purposes;
• Instructs the provider;
• Pays the provider;
• Signs related terms;
• Makes a transactional decision influenced by the recommendation; or
• Becomes committed to using the service.

Disclosure after the customer has committed is too late to support a properly informed choice.

4.2 Repeat disclosure

Depending on the circumstances, disclosure may be appropriate:

• When the service is first recommended;
• In the relevant written communication;
• Before customer details are passed to the provider;
• In the provider quotation;
• Before the customer opts in; and
• Again if the commercial arrangement or fee changes.

Important information should not be hidden solely in lengthy terms and conditions.

4.3 Prominent disclosure

A disclosure should be:

• Easy to find;
• Clearly presented;
• In plain English;
• Legible;
• Given sufficient prominence;
• Separate from unrelated information where appropriate;
• Provided before commitment; and
• Suitable for the method of communication.

The disclosure should not be:

• Hidden in small print;
• Buried in a privacy notice;
• Placed only at the end of lengthy terms;
• Described vaguely;
• Provided only if the customer asks;
• Disguised as an administrative detail; or
• Given after the referral has already been accepted.

4.4 What the disclosure should explain

A proper disclosure should normally state:

1. The name of the provider.
2. The nature of MyEstate’s relationship with the provider.
3. That MyEstate will receive a benefit.
4. The amount of the referral fee or how it is calculated.
5. When the fee becomes payable.
6. Whether the provider is connected with MyEstate.
7. That the customer is free to choose another provider.
8. That declining the referral will not disadvantage the customer.
9. Any relevant customer costs.
10. How the customer can obtain further information.

4.5 Why omission matters

Under the Digital Markets, Competition and Consumers Act 2024, unfair commercial practices are prohibited. Material information means information the average consumer needs to make an informed transactional decision, and omitting material information may amount to an unfair commercial practice.

A hidden financial incentive may affect how a customer evaluates a recommendation. Employees must therefore follow MyEstate’s approved disclosure procedure.

Lesson 4 key point

Disclosure should be made early enough, and clearly enough, for the customer to make an informed choice.