UK brokers pay three times as much as nearest EU counterparts
British brokers’ regulatory costs are three times higher than those of their counterparts in the next most expensive European state, new Biba research has revealed.
The study, one of two linked pieces of research launched at a House of Commons reception last night, shows that the direct and indirect regulatory costs of broker regulation are three times those in Ireland - the next most expensive EU member state.
Commenting on the findings, Biba head of compliance and training Steve White said: “The research highlights just how out of line with the rest of Europe the regulatory costs to UK brokers are. Not only are the direct costs, such as the fees and levies the highest by a wide margin, but the indirect costs bear no relation to costs elsewhere in the EU.”
A linked piece of research, published in tandem with the broker regulation study, shows that the economic benefits of general insurance broking equate to around 1% of GDP, putting the sector on a par with the much higher profile agricultural industry in terms of its contribution to the UK economy.
According to the regulation report, carried out by CRA, the only two significant risks of market failure that insurance brokers pose to regulatory objectives are the potential for low quality advice resulting in the mis-selling of products, and the potential for loss of client money.
Biba chief executive Galbraith said these issues should be the focus of new regulation and not what the report branded the current overly costly and disproportionate system of regulation.
“Our members tell me repeatedly that they want certainty and so a more prescribed approach on areas like capital requirements and adequate resources would seem to be more appropriate. We are an important, valuable and low risk sector.
"This should be reflected in a more appropriate and proportionate approach from the regulator. We would therefore welcome the opportunity to discuss with HM Treasury, the FSA and the new Financial Conduct Authority, how this can best be delivered.”