IMD a key step in restoring consumer confidence, says Barnier

The revision of the Insurance Mediation Directive (IMD II) is an “important step” in restoring consumer confidence in the financial sector, according to a top Brussels official.

European Commissioner Michel Barnier also told the insurance and financial intermediary sector at a meeting held at the European Parliament last week that everyone working in the industry needed to be regulated and monitored in an “appropriate, effective and intelligent way”.

Addressing the European Federation of Insurance and Financial Intermediaries (BIPAR) conference, Barnier recognised that the insurance sector was not at the origin of the financial crisis and should be differentiated from the banking sector.

Ahead of the publication of the revised IMD I and the proposed packaged retail investment products (PRIPs) regulation, Barnier said that he wants a “proportionate approach” and assured delegates that proposed rules would be balanced and take into account the specific needs of the sector.   

The British Insurance Brokers’ Association (BIBA) welcomed Barnier’s comments that the scope of the IMD II would include all those who sell insurance, with consumers being entitled to the same information and protection wherever they buy their cover.

BIBA chief executive Eric Galbraith said: “We are pleased that the scope of the revised IMD will include all those selling or advising on insurance but have concerns that changes to the process of transparency will lead to additional costs, and no benefits to consumers or small businesses.

“I would urge our new regulator, the FCA, and the UK government to work with the sector and to engage with the European Insurance and Occupational Pensions Authority (EIOPA) in order to ensure the UK maintains its world leading position on risk management and insurance protection.

“60% of the costs of EIOPA are paid by member states and we have to question the value of this to the UK. There must be cost oversight and accountability. Regulatory costs in the UK are already disproportionately high.”

Responding to Barnier, BIPAR chairman Paul Carty said: “We need the legislation to be proportionate, allow choice and not distort competition.  Achieving a level playing field for consumers and intermediaries is very important to us.  The insurance sector did not start the financial crisis and we are different to other sectors of financial services, but we are willing to play our part.”