Should brokers and insurers shake with fear?

The Financial Conduct Authority’s new boss Martin Wheatley is certainly baring his teeth. At the ABI Conference yesterday, he vowed to ‘shoot first and ask questions later’ when it comes to banning products.

He’s also promised to crack down on commission-based sales where customers are sold financial products at any cost.

So how worried should insurers and brokers be?

It’s clear that Wheatley has got banks in his target sights rather than insurers and brokers.

He’s desperate to avoid another payment protection insurance mis-selling scandal, which was by and large caused by bank staff being too aggressive in selling the products.

Furthermore, banks are now in the firing line over other aspects of their business, for example, the way they bundle products together, including insurance.

That doesn’t mean insurers shouldn’t be worried. The sort of products being looked at are identity theft and mobile phone insurance. But the big revenues earners for insurers that the regulator concerned about are the ancillary products sold in connection with car insurance.

Insurers are taking hefty commissions on many of these products, which raises the question of how valuable they are for the customer.

But the bottom line is that if insurers can prove that they have clearly explained the products to the customer, and that the paperwork is in line with the customers’ expectations, then they will have nothing to fear.

This will mean better training for insurer and broker sales staff in personal lines. That’s investment surely worth paying for if it means keeping clear of the regulator’s claws.