Which of the following actions by a producer could lead to regulatory penalties?

Choosing not to disclose commission structures is a significant action that could lead to regulatory penalties because it violates fiduciary duties and transparency requirements in the insurance industry. Producers are expected to maintain a high level of trust and integrity when dealing with clients, which includes clearly communicating how they are compensated for their services. Not disclosing commission structures can mislead clients about the true cost of the insurance products they are purchasing and may influence their decision-making based on incomplete information. Regulatory bodies oversee these practices to protect consumers and ensure fair practices within the industry, and failure to adhere to disclosure requirements can result in disciplinary actions, including fines or license suspension.

The other actions listed, while they may involve considerations of ethical practice, do not inherently violate regulatory requirements in the same way as the lack of disclosure about commissions. Offering extra services, providing full transparency on policy provisions, and encouraging policy diversification are generally viewed as positive practices that contribute to a constructive relationship with clients and do not pose a risk of regulatory penalties.