Eric Galbraith brands FSA’s commission disclosure review a ‘backward step’
Biba chief executive Eric Galbraith has lambasted the FSA over the slow progress of its efforts to cut red tape, and urged the regulator to accelerate its moves towards a principles based regime.
He was also critical of the regulator’s review into whether mandatory commission disclosure was needed, stating that it was a backwards step which suggested the FSA would burden the industry with further rules.
Speaking at the Biba conference, Galbraith said: “[FSA chief executive] John Tiner and the FSA are still moving towards principles based regulation. John, of course is moving on, but I’ve seen little evidence that principles- based regulation has.
He added: “One can only hope the FSA’s move towards principles based regulation is not going to take as along as it did to build the Wembley stadium.”
Galbraith said the FSA’s review of commission disclosure was a “step backwards” and suggested that “the FSA is considering more rules for the industry, despite protestations to the contrary”.
This, Galbraith said, was “inconsistent with the FSA’s desire to regulate through high level principles and to rely on market solutions where appropriate”.
He added: “We can only hope that the additional evidence to emerge from this review will finally lay to rest the belief, in some camps, that greater transparency for commercial customers cannot be achieved by the market of its own accord and that further regulatory intervention is needed.”
But the FSA insisted that it had not come to a decision about whether to mandate commission disclosure.
Andrew Honey, head of insurance in the FSA’s small firms division, told the Biba conference: “We have not made our minds up on the issue.”
Galbraith also expressed serious concerns about the EU’s anticipated review of the Insurance Mediation Directive (IMD).
He warned that the review could focus on the broker market and fail to address direct insurers and secondary markets. He said there needed to be a “level playing field” in terms of regulatory requirements.
His comments came as a study for the City of London found that the IMD had been implemented disproportionately in the UK than in other European states.
Michael Snyder, chairman of policy at the City of London, said: “It appears that the IMD is increasing cost and regulatory burden to the point where smaller operators could be driven from the market.”
Galbraith called on the government to ensure that London remains a
competitive financial centre. “London’s current good fortune is not guaranteed to last forever,” he said.