Welcome to the Laurel and Hardy comedy show, known as broker regulation. If it were not so serious, it would be difficult to know whether to laugh or to cry.
Remember the scenario? The stout Oliver Hardy glares at the thin, sheepish Stan Laurel, hits him over the head with his bowler hat and says: "Another fine mess you've got me in, Stanley!"
The "Stan Laurel" of the regulation comedy is the Treasury, which has managed to mislead the General Insurance Standards Council (GISC), and possibly itself at the same time (quite a feat), while also rubbing the noses of the insurers in the dirt.
A fine mess, indeed, Stanley!
The Association of British Insurers (ABI) lobbied ministers of the new Labour government long and hard in 1997 against statutory regulation.
It won the day and it was smirks all round at Gresham Street. Now the smiles have been wiped from their faces at this volte-face from the Treasury.
However, the result was the GISC, which now, it seems, is destined for the scrap heap. Even Dolly the sheep, arthritis notwithstanding, will have lasted longer. So why have ministers stood on their heads?
It is because the European Union (EU) Directive of Insurance Mediation requires each member state to regulate those who sell general insurance. Except that those who sell insurance as a secondary business. They are excluded.
So Joe Broker is liable to legal sanctions, but Lunn Poly and its travel policies and Dixons and its extended warranties are not.
However, the government has promised to look at firms that sell insurance as a secondary product. Firms, incidentally, that were covered by GISC.
But the EU Directive has been slogging its way through the Brussels machinery for the past four years, so why set up the GISC in the first place?
Enter the Treasury, which appears to have led the GISC up the garden path by telling it that the Directive was years away, would be watered down anyway and - oh, yes - might only affect brokers trading across borders.
To be fair, the Treasury may have genuinely got it wrong. It was wheeler-dealing at the political level that shoved the Directive up the EU agenda.
But the Treasury made yet another goof - leading the GISC to understand that it could stay in existence, acting with delegated powers on behalf of the FSA. All this, we are told, has been in the interests of the consumer. The consumer should be so lucky.
