Biba has taken its battle with the FSA, over the watering down of rules relating to direct insurers to the next level, Insurance Times has learned.

The trade body has submitted research to the regulator which it claims shows consumers are confused about whether they are dealing with a broker or a direct insurer.

Biba is arguing that the regulator should revise changes to the rules, introduced last year, which mean direct insurers can give out less information to customers than brokers.

This potentially means quicker and more straightforward sales for direct insurers, in effect destroying the "level playing field" between brokers and insurers.

The research, seen exclusively by Insurance Times, found many customers (21%) did not know whether they were dealing with an insurer or a broker. A majority (54%) of consumers were unable to clearly articulate the role of their broker and their insurer.

Steve White, head of compliance and training at Biba, said: "We are making the point to the regulator that customers are confused. Any-thing the FSA does to add confusion would potentially conflict with its statutory objectives. It will also conflict with the aim to promote financial capability."

But White admitted that the research did not reveal consumers were detrimentally affected by this.

The move is part of Biba's long-running campaign to persuade the FSA to reverse its decision to change the disclosure rules for direct insurers. But the FSA has resisted the trade body's arguments (News 23 June 2006).

The regulator says applying the disclosure rules to direct insurers "gold-plates" the Insurance Mediation Directive and does not benefit consumers.

White said the latest research was "more clear evidence" of confusion. He said Biba would to lobby the Treasury if the FSA did not change its mind.

An FSA spokesman said: "There are no plans to revisit this issue."