THE Competition Authority is on the verge of ruling that a commissions agreement with insurance salespeople is illegal. The agreement is worth as much as £80 million a year and affects the livelihoods of more than 4,000 people.

Officially known as the "Agreement on Maximum Rates of Remuneration for Life Business" this is a deal worked out 10 years ago by the life, insurance companies, which were under pressure from the Minister for Trade at the time to cut high commission rates or face statutory controls.

To the industry, it has been the cornerstone of responsible trading to its detractors, it has prevented full disclosure of the costs associated with life assurance policies and it has inhibited free competition in the market.

The signs do not look good for the industry. A fortnight ago, the authority informed the IIF and the Consumer Association of Ireland, the principal objector to the agreement, that its intention was to "refuse to issue a certificate or grant a licence to the notified agreement".

It did give "interested third parties" another three weeks to lodge their "observations" before it made public its final decision, but the summary of facts of the case which the authority has produced appears to be an indictment of the agreement.

If the Competition Authority does proceed and, in effect, prohibits the insurance commissions agreement, it will be the second time in recent years that the authority has intervened in the way the financial services industry regulates itself.

Five years ago, the authority declared the Irish Stock Exchanges system of fixed commissions on gilt dealing illegal and ruled that the exchange's rule prohibiting stockbrokers from trading on their own account as well as act as agency brokers was in breach of competition law.