Resources would be "better spent on other issues"
BIBA has expressed frustration at the result of the Financial Services Authority’s forensic review into transparency in the commercial insurance market.
Eric Galbraith, BIBA chief executive, said: “BIBA and its members have been fully involved in the forensic review, both with the market failure analysis and then on the cost-benefit side. These efforts have been recognised by the FSA, which has cited the potential costs as a major influence in their decision not to mandate disclosure at this stage.”
Galbraith added: “The commercial insurance market is now more transparent than ever before. The work undertaken by BIBA in respect of managing conflicts of interest and use of our prescribed TOBA wording has led to increased levels of transparency for commercial customers.
“The FSA began this process nearly two years ago and we are frustrated that even after a forensic review which proved that the costs of mandatory disclosure fall disproportionately on smaller firms and exceed the benefits of disclosure, the FSA is still continuing to spend valuable time and resources on this matter. We believe these resources would be better spent on other issues.”
“We continue to believe that a market solution is the way forward and will, of course, engage with the FSA in further addressing the conflicts of interest issues and in ensuring there is a suitable process in place to answer any questions around remuneration from the customer.”
Steve White, BIBA head of compliance and training, said: “BIBA has worked tirelessly during the last couple of years to help its members and their customers with regards to conflict management and greater transparency at the point of sale.
“If firms can demonstrate that they are identifying and managing potential conflicts of interest within their businesses, have a process in place to fully disclose commission upon the request of the customer and are using the BIBA TOBA wording, we believe that the concerns expressed by the FSA can effectively be addressed.”
White continued: “We are concerned that the FSA appears to be considering greater levels of protections for commercial customers than they are proposing for retail customers in CP07/11. We believe that they should be more concerned with protecting the individual, rather than the professional buyers of insurance.”
