Barry Fehler: The regulator brokers need and deserve

As insurance brokers, we have an opportunity to rectify our current regulation, one which we may not have again in the foreseeable future.

The government is asking for responses regarding financial services regulation, and I think we should take the bull by the horns and insist on our own regulator along the lines of the old Insurance Brokers Registration Council (IBRC). Our own regulator could still report to FSA mark II, but if correctly set up it would at least understand our business.

We should remember that we finished up being regulated by the FSA by accident and not by design. When the EU regulations for insurance intermediaries was announced, the government had only just disbanded the IBRC and was not sure where to put us. The FSA was the closest they could find at the time.

Insurance brokers have very little in common with banks, building societies, hedge funds and even insurers. We need and deserve our own regulator. We are a vast industry in our own right. Solicitors and accountants have their own regulators – why not insurance brokers?

Then there are the costs. If this government is really going to keep its promise and reduce costs and red tape, this is an ideal opportunity. Our costs with the IBRC were under £1,000 and they did a good job; they oversaw both our financials and our professional ethics. Registered brokers were not going bust on a large scale and the public was not being ripped off. The only real problem with IBRC was that it was not compulsory.

While being under the FSA’s domain, our costs at South Essex Insurance Brokers shot up to almost £30,000, and this rose to around £46,000 with the Financial Services Compensation Scheme payments. This is madness.

I really do hope that our trade bodies get behind this and go all out for our own regulator, and not just accept a compromise. This is our only opportunity and I cannot see a reason why this government would not accept the idea. Surely it cannot be beyond our grasp.

I am confident that every insurance broker would back the idea of our own focused regulator that understood our business and would not keep bringing out the gold plate.

Meanwhile, another issue lurking in the background is a possible merger between two of our larger insurers.

I’m sure that most brokers would not welcome this. In the past, when other mergers or takeovers have occurred, we have had to endure periods of even worse service, uncertainty and very little if anything to show for it from an insurance broker’s perspective.

It also reduces our markets and competition between insurers. Personally I was always very sorry to have lost Royal Insurance and one of my all-time favourites Commercial Union. Several among us will also remember how many good motor markets there were in Lloyd’s – now there are only a small handful.

Let us hope it is just insurers testing the market. IT

Barry Fehler is a director of the IIB and deputy chairman of South Essex Insurance Brokers.