The General Insurance Standards Council (GISC) has clashed with consumer groups over its plans to reform its 16-member governing body.
The National Consumer Council (NCC) and the National Association of Bank and Insurance Customers (NABIC) want a majority of GISC directors to be independent representatives, however the GISC is proposing only five independents.
The GISC is also proposing that a majority (ten) of its directors, excluding its chief executive, should come from the insurance industry – with possibly six representing intermediaries and four insurers.
Stuart Cliffe, chief executive of the NABIC, said: “It begins to appear that the GISC is attempting to fix its ruling council to perpetuate its own best interests.”
He suggested that the GISC was in danger of losing sight of the reason for its existence – namely to restore the public's confidence in the beleaguered industry in the wake of various mis-selling scandals.
Cliffe proposed at least half the GISC's directors should be independent.
The GISC's proposals are broadly based on the NCC's model for self-regulatory bodies, but diverge significantly on the issue of independent representation.
The independent body for consumers said that a “credible” self-regulatory body should have a majority of independent directors on its board, otherwise its monitoring procedures could suffer.
A spokeswoman for the NCC said: “The GISC's proposal to move from two to five independent directors is a step in the right direction but does not go far enough.”
The GISC acknowledges but rejects the consumer groups' arguments in its consultation document on corporate governance.
It said: “Against this has to be measured the importance of having practitioner involvement and the experience of industry professionals. The board considers that for the time being one- third of its members should be independent directors.”
The deadline for responses to the GISC's proposals is March 1, 2001.
