Will the FSA's latest plans result in a market-led solution?
I stick with regulation this week. While, I believe the whole insurance market and our sector in particular has moved forward on “transparency” and “managing conflicts” in particular, this view is not held by the FSA and they are going to be out and about this spring testing the rigidity of firms’ conflict management processes.
The FSA’s forensic review failed to prove a cost benefit case to mandate commission disclosure and rather than leaving it there, the FSA is now planning to continue to investigate the area by undertaking three work streams:
a) The publication of a discussion paper which will cover some of the areas highlighted in the cost benefit report. This will give all parts of the sector the opportunity to explain to the regulator what their particular firms are doing in relation to providing greater transparency for commercial customers and to make their individual views on the matter known. BIBA will be encouraging its members to fully engage in this important discussion.
b) Visits to a number of firms to establish whether conflicts are being fully and appropriately identified and managed.
c) Speaking to professional buyers of insurance to seek their views on both the content and style of disclosure presentations.
I hope this ongoing discussion and investigation by the FSA will finally result in a market solution, which is something that BIBA has been working on for nearly two years.
However, if the FSA finds that the market has not moved forward on transparency and managing conflicts we will be back to square one. Please engage with the forthcoming discussion paper and let us together finally lay this matter to rest.
