Biba 2012: Galbraith warns of EU pressure for mandatory commission disclosure

Biba’s chief executive Eric Galbraith warned of the potential European pressure for mandatory disclosure of broker commissions and the even greater cost of regulation at the opening of this year’s conference in Manchester.

Galbraith also announced that Biba has appointed Deloitte to carry out a strategic review to consider what the organisation as a trade body in the 21st century should look like, following its merger with IIB and a full membership survey.

“There is a fundamental difference between investment products and insurance products,” he said in a message directed at the European Commission and European Commissioner Michel Barnier.

“While we welcome and indeed applaud attempts to aid customer understanding of financial products, we implore you to ignore pressure for a ‘one size fits all’ approach to regulation – and to ensure that the regulation of non-investment insurance remains focused on the differences and nuances inherent in our sector.

Addressing members at the event, Galbraith called for insurers to support unconditional risk transfer and revealed that has appointed consultants and lawyers to find another solution to the structure of the Financial Services Compensation Scheme (FSCS).

He urged the FSA to get its review of the FSCS funding model underway and said that all options needed to be considered.

Galbraith warned brokers about pressure on remuneration transparency, saying: “European political interference in the remuneration system could be a by-product of the over-zealous application of investment type rules into the general insurance sector.”

The warning comes despite UK support from the Treasury, the FSA and Biba for disclosure on request, and a cost-benefit analysis from the European Commission.

Turning to regulation, Galbraith called on insurers to work with Biba to develop a market agreement on unconditional risk transfer to address changes to client money rules and a growing focus from the regulator on premium handling.

Click here to watch Insurance Times’s LIVE coverage from Biba 2012 in Manchester