Naive lobbying leads to an avoidable failure

I watched with dismay over the summer as the Association of Insurers and Risk Managers ran into a totally avoidable brick wall at the Treasury with its lobbying to ensure risk managers are protected from the regulatory snares of the Financial Services Authority.

The issue was relatively straightforward. Are group risk managers who arrange insurance for subsidiaries acting as intermediaries and, potentially, subject to the same FSA regulation as all insurance intermediaries? The FSA swiftly passed the buck to the Treasury, which, with reasonable alacrity for a government department, said no.

This, frankly, was the best Airmic was going to get from the Treasury.

However, it was not satisfied and returned, demanding certainty. This was never going to happen because such 'certainty' could be delivered only by amending the Financial Services and Markets Act and where in a heavypre-election legislative programme was the government going to find time for that? Hardly a vote winner, after all.

If lack of parliamentary time was not a great enough hurdle, then the fear of just how many other groups would want to amend the Act certainly rules out any legislative fiddling for some time to come.

To begin with, travel agents and white-goods retailers would be queuing up to ensure that they were excluded from the Act in perpetuity. Beyond that are many vested interests that would be quick to promote their own amendments to the Act.

These things have a habit of spiralling out of control once they reach parliament and a simple amending bill can turn into a major piece of legislation very quickly. If there is one thing the current government does not want to do over the next year it is lose control of anything going through parliament.

It was this failure to see this inevitable Treasury response that has left Airmic high and dry. It made the simple mistake of asking for something that could never be granted. It now appears to have failed where, largely, it had succeeded and, in doing so, has once again exposed the naivety of the insurance industry when it comes to lobbying.