Brokers are losing faith in the FCA amid rising fees and levies against a backdrop of carrier failures
By Content Director Saxon East
Remember all the talk pre-Brexit of the UK becoming a regulation lite ’Singapore-on-the-Thames’?
There are signs across the financial sector that the opposite is happening. The latest is the FCA’s ban on all trading in cryptocurrency derivatives.
The regulator could have taken many different choices, but instead went for an outright ban.
This is an area where the UK was a world leader and could potentially have grown into a multibillion pound industry, creating many much-needed new jobs.
But all the FCA is doing is driving UK customers - the ones it is trying to protect - into the arms of more risky, unregulated foreign exchanges.
The law of unintended consequences
You are left wondering whether the FCA simply can’t regulate in a nuanced way, so instead goes for the most extreme measures to minimise its workload.
This is all a sign of things to come in insurance.
Brokers can expect to see a far more interventionist FCA in the coming years. It is now armed to the teeth with the best data science.
Further intervention will only serve to stoke the anger of brokers. Some brokers now argue that the regulators are a ”bigger threat than Covid”.
Brokers are paying eye-watering fees and levies, in a large part due to collapsing insurance companies that UK regulators failed to curtail.
Over the years, they’ve paid for the collapses of Enterprise, Alpha, Gefion, Milburn, Balva and Gable (who didn’t see that coming?) - the list goes on and on.
The argument from the FCA and PRA was that these weakly capitalised carriers, many of which were unrated, were coming to the UK through the back door of European regulation.
With Brexit over, this is a golden opportunity for regulators to end this scourge.
If it fails to do that, then insurance brokers will completely lose faith in them.