Plans to merge the Association of British Insurers (ABI) with the British Banking Association (BBA) have taken another step forward.
The general insurance board of the ABI has given the thumbs up to plans for entering discussions with the banking trade association.
A source close to the board said there was a vote of approval for merger talks to start, but certain conditions should be sacrosanct.
It is understood insurers are concerned the BBA, with 300 members, will dwarf the ABI. Consequently, members fear that the organisation's lobbying power will be diminished.
Former ABI general board member Andy Homer said the move was inevitable. "The boundaries between different financial products and propositions are diminishing and so the aims of trade organisations are converging."
He explained: "When you buy a mortgage now, you can get health cover, property cover and other products embedded. So when the regulator comes to deal with these products, it wants a consistent approach.
"It will be a benefit to the industry if we can speak with one voice on regulatory, taxation and representational matters."
Homer, who will be the next Chartered Insurance Institute (CII) president, said the blurring of lines between banking and insurance products would lead to closer ties between the professional institutes.
"Professional institutes will be working closer together as the skills needed in banking and insurance industries come closer together. However, CII members will not be rushing into any merger. Statutes would need to be changed and more work needs to be done."
ABI director general Mary Francis revealed plans to ask members to consider a merger in November. She said: "Coalescence is needed to mirror the Financial Services Authority (FSA). We need to speak with a common voice."
The FSA is known to be a fan of the idea. It is understood the FSA would welcome a merger because it would simplify its lines of communication with businesses.
An ABI spokesman said chief executives from key members of both organisations have been weighing up the pros and cons of a merger. But, he added, no formal agenda has yet been reached.
"Whatever the progress over the coming months, the final decision rests with members," said the spokesman.
BBA chief executive Ian Mullen said any decision on a merger would be up to members. He refused to comment further.
A beginner's guide to the British Banking Association
- complaints from small businesses about competition
in retail banking (especially high charges); concerns over money laundering; and consumer complaints regarding the difficulties of changing banks.