Ecclesiastical Insurance has attacked proposals to charge brokers a £500 fee for every claim handled by the Ombudsman. It says it will give its "favoured" brokers financial assistance if they fall foul of the system with one of its policies.

The Gloucester-based insurer said it would not support the proposals, as described in this paper last week, which impose a mandatory £500 Ombudsman handling fee for every complaint it investigates against a broker.

Last week the AiiB warned brokers to expect to pay this amount if a customer of theirs complained to the ombudsman, even if they were found to be blameless. It warned of draconian measures facing brokers unless they became pro-active in the debate about Ombudsman scheme membership.

Ecclesiastical, which is the only insurer to date to come out strongly on behalf of brokers on the issue, described the fee as "iniquitous" and "an attack on the industry".

Early this week the company contacted Insurance Times to say that it would help with defraying costs which its partnership brokers were exposed to.

"This is an iniquitous idea and we'll be working with our partnership brokers to find ways of minimising the cost should this situation come about," said Ecclesiastical's Brian King. "It's an attack on the industry, not just on brokers... We want to show our support for them."

Ecclesiastical currently has 100 partnership brokers but aims to double the number within the next 12 months. King said that the company would be contacting its partnership brokers about how to proceed in the coming weeks.

Meanwhile Lancashire broker David Miller has said bitter personal experience had left him extremely concerned about unwarranted complaints.

In a letter to Insurance Times (see page six) he said: "A summons was actually issued upon ourselves as our clients brokers because a third party insurer was contesting liability and had not as yet reimbursed our clients excess."

"I presume under this brilliant new system the client would merely have had to have make a complaint to the Insurance Ombudsman and that would have cost us £500."

Speaking to Insurance Times he said the proposal would be "a joke – if it wasn't my living".

The debate about the Ombudsman is taking place in advance of the launch of the GISC's consultation paper on self regulation.

The paper on the future of the industry will be launched on 25 October in Glasgow at the first of a series of roadshow seminars.

The events are designed to give brokers an opportunity to debate their future under self regulation. This week GISC chairman Chris Woodburn said he was appealing for a strong turn out.

However the whole debate about self regulation for any sector of the financial services industry was under a cloud this week after Trade and Industry secretary Stephen Byers went on the attack over the alleged mis-selling of mortgages.

One senior industry figure said that if mortgages were to become regulated by statute then self-regulated general insurance would "stick out like a sore thumb."

The key areas for GISC debate in addition to customer redress and membership of an ombudsman's scheme will be membership and fees; sales practices; capital adequacy; competence and training; disciplinary procedures and elections to the board.

(see Letters)