Proposed amendments were ‘a backward step’

Biba has slammed proposals by the FSA to undermine customer protection, describing them as “a backward step”.

In response to the FSA’s consultation paper proposing amendments to the insurance conduct of business (ICOB) rules, Biba has detailed objections in three areas:

• Putting private medical insurance (PMI) into a low risk category

• Scrapping the rule on giving customers printed policy summaries

• Reducing commission disclosure to consumers and increasing it for corporate clients.

Steve White, Biba’s head of compliance, said: “The General Insurance Standards Council and the ABI before that, had specific codes of practice covering the sale of PMI because it is so complicated. We have no problem with the idea of splitting products into high and low risk, but putting PMI into the low risk category is plain wrong.”

White also criticised the FSA’s plans to scrap printed policy summaries, pointing out that the regulator had emphasised these in the past. Providing summaries came from the EU Distance Marketing Directive but it was silent on the format. The FSA insisted on a durable medium and then forced insurers to use its own ‘key facts’ logo on them.

“The FSA has spent £17m on financial capability and £2m alone on its Insurance Made Clear programme. Scrapping policy summaries is one hell of a backwards step.”

White also criticised suggestions that consumers only need be told a single premium, regardless of any add-ons or commission, whereas large corporate clients may be given full disclosure.

“At the moment if you add anything to a premium, disclosure is mandatory. So, if someone asks if you can get a better quote than the £300 they’ve just had and you get one for £240 and add £40 to it, you currently have to tell them that the premium is £240 and you have charged a fee of £40. That would go.

“We don’t believe there should be commission disclosure across the board, but it is mad to turn if off for consumers and turn it on for the likes of ICI.”

Biba is writing to the FSA with concerns and will make a full submission by the end of September consultation deadline.


Biba has asked us to point that it did not believe our story concerning commission disclosure – “Biba blasts FSA over ‘ludricous’ proposals” – accurately represented its position.
Biba chief executive Eric Galbraith said that criticism centred on a proposal in consultation paper CPO7/11.
Galbraith said: “The FSA is proposing to remove the requirement to separately disclose fees to consumers when they buy other ‘products’. I described this approach as ‘ludicrous’ when you consider that the FSA is contemplating the possibility of introducing rules for commission disclosure to commercial customers. At no time did I even hint at support for mandatory disclosure of commission for either retail or commercial customers.”
He said that the Biba’s view is that greater transparency for commercial customers can be achieved by the market of its own accord and we do not need further regulatory intervention or support mandatory disclosure.