Broker Expo: Referral fee ban will be the 'next scandal'

According to Ian Wainwright, broker sales director at Ecclesiastical, a ban would be "a great thing", as it would create a more level playing field.

"We need to get back to the point where the price you see is the price you pay, and the provincial brokers have got as much chance of doing a deal with a client than other larger outfits."

Grant Ellis, non-executive chairman at Broker Network, said he was very pleased with the proposal and that he would be glad to see a complete ban on referral fees.
"I think it's the right thing to do. It would mean a massive reduction in the costs of claims, getting rid of that subsidy that people have had to pay."

However, he also said he viewed the controversy surrounding referral fees as the "next scandal" for the industry, and likened it to the PPI mis-selling issue.

Matthew Reed, MD, intermediary and direct at Axa Commercial Lines, argued that the issue could be turned into a positive thing for the industry: "We can tell people that we're cleaning up our act. There's always something you can take from bad news."

Mr Ellis did not take a similarly optimistic view.

"We waited for a politician to talk about this, we didn't come out and say, ‘You know what, this is wrong, we shouldn't be doing this'," he said.

Mike Crane, commercial director at LV Broker, agreed with this point and warned: "I think this could have a very negative impact. There's a much wider understanding of referral fees now.

"There's a lot of people out there who were probably completely ignorant of referral fees, and are now just a little bit more disappointed with the insurance industry."