Editor's comment: Regulator change risks instability
The announcement that the Financial Services Authority is to be disbanded and replaced with a combination of regulation from the Bank of England including a new Consumer Protection and Markets Authority brings opportunities and dangers.
The system is at last something close to functional for brokers, so anything too radical will cause another round of costs and pain. There are still significant flaws, such as Financial Services Compensation Services fees rising 700% for every broker despite no general insurance firm going under due to payment protection insurance mis-selling.
The FSA has set about a full review of the funding process and the British Insurance Brokers' Association is pushing for the 13,500 band of intermediaries selling insurance to be segmented further. Many of the problem companies have been in the business of providing unsecured loans and adding protection insurance on top, which has nothing to do with traditional insurance broking. The total amount of claims from mis-selling PPI from 2005 are still unclear; a record number of complaints are flooding in, meaning that the FSCS levy could even increase again next year for the general insurance intermediation group of companies.
As the decisions are made about how best to continue regulation of the sector (please, no new handbooks), the review into the Financial Ombudsman Service and FSCS needs to clear up responsibility for failed firms in the insurance intermediary sector. Brokers must make their voices heard.
PB goes green
In August, we are making our first ever digital-only edition to highlight green issues. Climate change, whether man-made or not, is happening, with most people recognising that weather events are becoming more extreme and frequent. We will investigate the science, the opportunities and insurance risks, providing the business intelligence that matters to you and your clients. August's edition will be e-mailed to you and also hosted at www.broking.co.uk.
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