Biba and the London Market Brokers Committee (LMBC) will today release their joint response to the FSA Consultation Paper 160: Insurance selling and administration.
Biba chief executive Mike Williams said that the crucial issue for brokers was the FSA's proposed definition of a private customer.
The FSA wants to provide small businesses with the same level of regulatory protection as consumers. In CP 160 it is proposing that brokers treat all commercial clients with turnover of less than £1m per year as individuals, which would result in the reclassification of about 3.7million companies, or 97% of the UK's businesses.
Biba and the LMBC said that such a proposal would be administratively "difficult and costly" because establishing turnover is often onerous and because policy documentation must be supplied to all private clients before they commit to buying a policy.
Biba and the LMBC believe that "small businesses should not be given the same regulatory protection as individuals". Their submission said: "It is illogical to...apply a level of statutory protection at a similar level to the unsophisticated private policyholder, with no commercial experience whatsoever."
Instead, they are proposing that all incorporated companies, regardless of their turnover, be treated as commercial customers, and that only unincorporated businesses be classified as private customers.
Submissions in response to CP 160 are due to the FSA today. Despite suggestions that the FSA has received less than ten submissions, Williams said that "dozens" of brokers have made individual submissions to the FSA, a fact that the FSA confirmed.
