There’s hope for positive change in the year ahead, but don’t expect a fairytale ending
The Pogues and Kirsty MacColl’s Christmas classic “A Fairytale of New York” has become the 126th single in UK chart history to sell one million copies. First released in 1987, it has taken 25 years to reach that milestone, proving that some things take longer to achieve than others. It is with that thought in mind that we look ahead to regulatory matters in 2013.
The battle to change the Financial Services Compensation Scheme’s (FSCS) funding model is nearing a conclusion. The FSA is studying the responses to its consultation paper and while we at Biba recognise that trying to please all, or indeed some, of the interested parties is a daunting task, we believe that we have submitted a sensible, sustainable, affordable and equitable alternative.
In the meantime, the FSCS has recently announced there is a strong possibility that it will be forced to make an interim levy of around £20m on insurance intermediaries as a result of significantly more claims than they expected. This just lends further weight to our call for change.
The second major consultation paper issued by the FSA in the autumn related to proposed changes to the client money rules. This raised the concept of ‘unconditional risk transfer’ and, after Eric Galbraith’s call from the platform at the 2012 Biba Conference for the industry to come together on agreement for premium handling, we have been working with consultants, insurers and members to do just that.
We hope the results of our efforts will give insurers the comfort to allow most intermediaries to have unconditional risk transfer, to ‘pool’ risk transferred monies into a single bank account and for the arrangements to be the subject of a possible systems and controls audit.
Turning to Europe and the revision of the Insurance Mediation Directive. Through our involvement with BIPAR (the European Federation of Insurance Intermediaries), we have been working on this revision for more than four years. The fruits of this labour can be seen in the pan-European unity among insurance brokers and intermediaries, where there is uniformity of views on each of the major issues within the current proposed text. This enables lobbying at European level to be done with one voice – a fundamentally important tool when lobbying.
There is still no hard and fast timetable for when the IMD2 will be published, though those in the know suggest it could either be accelerated as both Solvency II and MIFID2 have stalled, or it could move further down the priority list as banking union takes up more and more of officialdom’s time.
And finally, among all this talk of what might happen and when, the Financial Services Bill has received Royal Ascent and so on 1 April the FSA will be replaced by the Financial Conduct Authority, first mooted by the Conservatives when in opposition in 2009. Compared with the “A Fairytale of New York”, that is almost overnight.