The Board of the General Insurance Standards Council (GISC) meets today to delay the start of operations in February after it received an unexpectedly strong response to its consultation document.
Among more than 250 responses, broker trade body Biba identified 36 key issues of concern raised by more than 400 of its members.
Topping Biba's list are calls to re-think the capital adequacy requirements and to keep the identity of 'insurance brokers' separate from less professional firms.
Other criticisms it levels at the GISC document include calling the professional indemnity requirements 'excessive' and the £500 compliant fee for each case brought before the Ombudsman 'unacceptable'.
Rival trade body the IIB has refused to issue a formal response until the GISC publishes its draft rules and application notes.
GISC Chief executive Chris Woodburn admitted both the number and diversity of the opinions expressed had taken the GISC by surprise.
For instance, intermediary trade body AiiB has highlighted costs and fees while insurer trade body ABI has concerns with competence and training requirements, complaints handling and rules regarding sub-agents.
But Woodburn dismissed concerns that GISC would be unable to create a workable regime to satisfy the entire medley of general insurance sellers.
He said: "I expect we will have to stall the GISC start date by at least two months. But I am delighted that we have received such a strong response. There has been widespread support for the principals behind the GISC."
The delay will have an immediate impact for intermediaries currently regulated by the ABI code of monitoring and Lloyd's brokers, expected to be among the first to join the GISC.
Woodburn denied that the original timetable was unrealistic, despite January 1 being the closing date for the second consultation – just a month before the body was expected to start operating.
But the AiiB was not dismayed by news of the delay. Chairman Mike Slack agreed there were issues that needed to be resolved, such as costs, but was confident it would not be a problem.
"We must not lose sight of the fact that the alternative to the GISC is regulation by the Financial Standards Authority," he said.
"The GISC may not be draconian enough for some, or light enough for others, but it is a starting point."
Biba chief executive Mike Williams agreed the feedback was very positive for the GISC, but identified ten issues of immediate concern. Chief amongst these was the rules regarding capital adequacy. Biba is calling for the solvency margin requirements, the current assets over the current liabilities, to be scaled down from £5,000 to £1,000.
"The £5,000 margin has been plucked out of the air. But two-thirds of our members have less than 15 staff and are not asset-rich."
The IIB also warned members to "wait and see," following its refusal to issue a response until GISC publishes its draft rules and application notes.
ABI deputy director general Tony Baker said insurers were very supportive of the GISC and expected conflicting issues to be resolved satisfactorily.
Ten concerns for brokers
1 Solvency margin of at least £5,000 unrealistic.
2 GISC must reserve the term "insurance broker" to those who maintain high standards.
3 Professional Indemnity limit of at least four times income should be scaled down to two.
4 The rulebook must reflect the major differences between personal and commercial lines.
5 The GISC should include all insurers, as well as loss adjusters and claims outsourcing companies.
6 The GISC board should be democratic and have a sensible balance.
7 An orderly transfer of IBRC registered brokers to the GISC needed.
8 Costs for The Financial Service Ombudsman Scheme are prohibitive.
9 The compliance monitoring visits at least once every four years will generate an unjustifiable cost.
10 There are serious concerns about GISC's ability to start operations without the existence of a complete rulebook.