Barry's blog: Speak for yourself

Since my last blog, it’s not been a problem to think of a subject to air this time – a change of government has been on everyone’s mind, and many in the insurance industry have been waiting with bated breath to see the potential early demise of the FSA.

We were promised by the Tories that the FSA would be scrapped and that insurance issues were to be regulated by a new Consumer Protection Agency. But, under the new mixed-hue government, that is now unlikely to be, according to the pundits.

My guess, and it’s only from reading the same material as you, is that our new government will have its time cut out sorting the myriad of problems they’ve inherited and that the influence of the coalition will frustratingly put radical change of the FSA on the back burner.

Vince Cable has been vociferous (indeed, in Insurance Times a few months back) about the need to retain some continuity with the FSA while acknowledging that mistakes were made and have been recognised to have been made. Equally, the Mr Cable has commented that the government should step in immediately and stop the “utterly ridiculous” £33m bonuses to FSA staff. I sincerely hope that his influence will mean action is taken and that sensible change will occur in the near future, and not by just recruiting a whole new raft of expensive employees to resolve inherent problems.

I have to say I’m fed up with the oft-made remarks that, without bonuses and seriously high salaries, the right people cannot be attracted. If they have to be part of the recruitment package, then it’s time that bonuses are paid only if the employee/manager/director performs their contract successfully and secures the desired objectives – both short and long term. I’m absolutely positive that most of the readers of this blog will, as business people and often in business in their own right, have empathy with this ethic.

What I want to see is a reasonable regulatory body. Whether that’s a new organisation or a revamp of the existing – using Cable’s words: “moving the regulatory furniture around” – is immaterial. It seems that one argument for maintaining the status quo is the insurance interest of the banks, rather than the overwhelming issue of the insurance companies and the industry generally being a great net income generator for the UK, a huge employer of people and a service industry to virtually every family and business in this country. And in the UK we have our almost unique (to Europe) and significant independent professional insurance broking sector offering advice and guidance on a plethora of complicated insurance issues to a huge number of clients. In total, the pure insurance business must be more relevant than several bancassurance operations!

Tarring everyone with the same brush of bringing this country to its financial knees seems to be par for the course. I was reading the other week about the ‘Geneva Association’ group of insurers that was bemoaning the fact that the IMF and G20 were lumping insurers together with banks of all people! What have we been saying for years about tarring the retailer (the insurance broker) together with the insurers and indeed those self-same banks? It is irrational.

Insurance brokers, it’s up to you to follow this government process on the future of the FSA, as it affects you, and not be the silent majority. By aiding your trade association in its endeavours to lobby, you could add weight. If you are not a member of a trade body, there’s never been a better time to join.

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