Independent broker blog: It’s a question of fairness

I’m sure the subject matter for my latest offering won’t come as a great surprise to many of you: this year’s massive hikes in FSA charges, most notably in the Financial Services Compensation Scheme (FSCS) levy.

I remember writing early last year that I was concerned that those of us who run sound and professional, if somewhat modest, businesses connected with the financial services would end up paying for the mistakes of others. Well, here we go!

I have yet to meet an insurance broker that sold payment protection insurance, and yet we are being expected to help pick up the pieces and bail them out. So who created the problem? Was it high street or online retailers whose business was to sell household or other goods, and if so are they being financially penalised? Is this another example of organisations that make a mess of non-core activities and, whether through poor regulation or plain non-compliance, succeed in creating a claim culture, dragging the whole financial services industry through the gutter?

I have read some of the background history to this, and while it was commonly accepted that a rise in fees was inevitable, some of the numbers being reported actually take my breath away.

Surely the governing body charged with the responsibility for monitoring the performance and actions of those connected to the financial services industry also has a responsibility to those firms working within the regulatory framework. Rather than just hike the fees when everything goes pear-shaped, why not police these areas properly in the first place? Or at least take some of the responsibility.

Reading the comments posted on this website in reaction to this year’s levies, I couldn’t agree more with the broker who, in response to the manner in which fee hikes were delivered, quite rightly put it: “The FSA are adamant that we must treat our customers fairly. Why are they not treating us fairly?”

Was the broking world given enough time and information to lobby the regulator prior to these decisions being taken? Debatable! Should we be expected to fund the mistakes made by those who choose to try and make a quick buck? Definitely not!

How much longer must the professional broking community stand by and watch the non-core misguided activities of others dictate what costs we must bear, not to mention increased scrutiny and regulation of our own activities – and why does it always seem to be a knee-jerk reaction?

While no one could have forecast the size, severity or global impact of the credit crisis, we can at least learn our lesson: prevention is better than cure. As it says on the poster on display in our shop window: “Supermarkets sell groceries, the Post Office sells stamps, and banks help with savings and foreign currency. Get your insurance from a professional!”

We, to the best of our ability and knowledge, are compliant in all we do and try to integrate ‘treating customers fairly’ into the fabric of our business. We have had to embrace regulation. Why? Because it’s our livelihood, it’s our business and it’s the one thing that we can use to demonstrate the professional and personal service we provide.

And because we care, because we can’t trade on our brand, and because we want our business to succeed, it makes us a soft target following the recession and the failings of others.

I suspect from reading the comments of other industry sources that, while a review is promised for the end of this year, we may well be saddled with this fee structure for a good few years to come.

It is no wonder that the broking world and regulator appear at times to be at logger-heads when we are faced with unrealistic increases in fees with no right of reply.

Peter Smits is managing director of The Ashbourne Insurance Group.