Can the industry agree a market solution to thwart mandatory commission disclosure?
See also: FSA will back down over disclosure
The industry’s next task is to convince the FSA that it can come up with a suitable market-led solution after the regulator declared that would be its preferred option.
At an industry summit at the regulators headquarters in Canary Wharf on Tuesday, FSA chief executive Hector Sants confirmed his desire for an industry solution to oppose mandatory commission disclosure.
Following its decision in December to carry out further work in to commission disclosure, and the release of its consultation paper on transparency, disclosure and conflicts of interest in the commercial insurance market in March, all signs have pointed towards a mandatory commission disclosure regime despite the FSA saying it would prefer not to mandate it if could be helped.
However, with brokers feeling they were fighting a losing battle, it now seems there may be light at the end of the tunnel.
The FSA gave the industry a chance to have its say on the issue, and brokers and industry figures alike have certainly responded. The Brokerbility group appointed Parliamentary lobbyists to add weight to their campaign against hard disclosure and industry trade bodies including Biba has urged brokers to make their feelings known.
“With brokers feeling they were fighting a losing battle, it now seems there may be light at the end of the tunnel.
With little under a month left for the industry to respond to the FSA’s discussion paper, it could prove to be one of the most important periods for the industry since the FSA began regulating the insurance market.
The FSA may have issued a lifeline but the industry now has to unite as one voice if it is to convince the regulator that it can maintain a market-led solution.
Biba has already been working on a solution and is working with the industry to develop the idea. It sent a questionnaire to members to ask about their willingness to use a set template for disclosure if one were devised. The model would use Biba’s Toba wording, which reminds commercial customers that they are entitled to ask for details of a broker’s commissions.
Steve White, head of compliance and training at Biba, said delegates at the FSA’s summit began discussing a solution and that the signs were positive.
“For most part there was pretty much agreement on most of the bits and pieces,” he said. “We were pleased that the FSA elaborated the point to the audience that that is their preferred outcome.”
He added it was now important that the industry keeps up the momentum. “People can carry on the discussion and think about the various parts of how the solution might look.”
