From rats to regulators

After attending the Broker Monthly dinner near Oxford last Friday what was left of my weekend was relatively quiet, allowing time to digest the Sunday newspapers and the CBI’s latest statistics. They made for uncomfortable reading, instilling a desire (albeit fleeting) never to emerge from under the duvet again.

The CBI warned of heightened risks to world growth with tighter credit conditions slowing growth in the advanced economies. The papers focused on Northern Rock, outpourings from the annual party conferences, potential interest rate rises, the government’s three year comprehensive spending review and election speculation. It all made the machinations of the general insurance market seem a safe haven, or should I stay a sturdy breakwater?

They say in London that you are never more than ten feet away from a rat. I suspect it is an analogy that we could also apply to regulators if one of the newspaper headlines which suggested more regulation as a result of the credit debacle was to be believed.

Better regulation, principles based regulation, light touch regulation, proportionate regulation – we can’t escape the stuff. Don’t get me wrong: this isn’t a call to scrap all regulators (far from it), but I just wish that we could achieve the right level of regulation for the general insurance market.

I hope the announcement from Hector Sants, the FSA’s chief executive, yesterday of measures to increase contact with small firms is a step in the right direction. The FSA is to introduce a programme of structured visits and/or telephone assessments to firms to test the quality of management and progress towards embedding TCF. Incidentally, BIBA has just published excellent member guidance on management information and TCF for those of you who are interested.

The FSA is presenting its increased supervision as a means of helping smaller firms better assist their customers. Firms should remember, however, that increased interaction with the FSA will also mean that it will be in a better position to identify where compliance lags behind. The announcement should serve as a wake up call to those small firms where compliance has not progressed beyond the bare minimum required to receive authorisation in 2005 that now really is the time to get their house in order.