Working with the FSA's final rules

Many of you know me from Professional Broking's sister title Post Magazine, where I spent three years as a reporter covering the broker market before moving on to my new position. And this is without doubt an historic era to be reporting and commenting on general insurance broking - the 'big bang', as Chris Arter, membership director of network start-up Total Broker Solutions, would have it.

The issues facing brokers in the coming years are well documented and too numerous to mention here. Suffice it to say, according to John Greenway MP, if every consultation paper and response document from the Financial Services Authority was stacked one on top of the another, the resulting regulatory paper tower would be nine feet tall.

Now the many rounds of consultation are over, save one concerning the handling of client monies and risk transfer. General industry opinion suggests those brokers that have digested and acted on the contents of the FSA's paper mountain have little to fear, though for the smaller players, which will experience an additional administrative burden, it may be too much to stomach.

In fact, the FSA's deliberation on the issue may actually benefit the networks, consolidators and independent firms offering principals and their books of business a new home.

Furthermore, many brokers will have been pleasantly surprised to discover several of the FSA's final rules regarding regulation of the sale of general insurance had been toned down. Notably, these changes include disclosure requirements being significantly reduced for intermediaries making introductions. The FSA has also allowed some flexibility over demands and needs statements.

That said, one rule many had hoped the FSA would tighten up is the requirement for insurers to honour a 21-day renewal notification period. Despite previous indications from the FSA that it would introduce a statutory notification period, the final rules revert back to the General Insurance Standards Council's voluntary code, which many regard as ineffective.

Although FSA consultation showed a greater number were against the imposition of a 21-day minimum notice period, the final decision ignores the Office of Fair Trading's recommendation, leaving many feeling there is still a case to be answered.

The FSA seems likely to revisit such issues as part of ongoing fine tuning, but in the meantime the regulatory framework in its final form is well regarded as workable. It is now down to the industry to resolve the outstanding issues to avoid further delays.