On 25 October 2001, Insurance Times warned the insurance industry that greater Financial Services Authority (FSA) regulation was on the way and, yesterday, was the first to alert the industry to the Treasury's imminent announcement.
Last year the government decided to introduce statutory regulation of mortgages but the proposals did not include mortgage advice by brokers and other intermediaries.
The move to broaden the scope of the FSA's mortgage regulation now means the final plans will not be in place before 2004, a delay of two years from the original deadline.
What the papers said:
The Independent said: "The move ... came as a surprise to many in the industry but was welcomed by several lenders."
It added: "The Government is particularly concerned that consumers should get a fair deal when they buy general insurance through their mortgage broker, or as part of a package with another product, as is often the case with travel insurance and extended warranties."
The Financial Times said: "The decision is likely to sign the death warrant for the two existing voluntary regulators, the General Insurance Standards Council and the Mortgage Code Compliance Board."
It added: "The decision to appoint a statutory regulator for general insurance is a change of tack by the Treasury, which in 1998 said it would `look to voluntary self-discipline rather than statute'.
"The Association of British Insurers had argued strongly for a continuing role for the GISC, which was launched only 18 months ago, and regretted the change."
The Daily Telegraph said: "The Government's about-face is widely believed to be the result of a new European directive that will force general insurance brokers to be regulated."
It then quoted the director-general of the Association of British Insurers, Mary Francis: "Since the General Insurance Standards Council was established and welcomed by the Government, the European Union has introduced draft regulation requiring general insurance brokers to be regulated by a statutory body. That is the main reason for this switch to FSA regulation. We regret that this change is felt to be necessary."
It added: "A beneficial side-effect of this Insurance Intermediaries Directive is that brokers will now be able to compete for business in Europe, if they wish to."
Reuters quoted the Council of Mortgage Lenders as "delighted" by the decision to regulate mortgage advice despite the delay it would cause.
"The CML firmly believes that the downside of the delay in implementing the new regime will be more than offset by the benefits of a true single regulatory system."
The Guardian said: "Ministers, who had originally opposed regulating mortgage advisers and brokers, have been forced by industry and consumer pressure into a u-turn ...
"The General Insurance Standards Council (GISC), which was founded only in July 2000 to police companies selling insurance and extended warranties, appears to have no long-term future."
The Daily Mail said: "Leading lenders welcomed the move to regulate home loans advice. Halifax said: `One in two mortgages is sold through a broker, so it makes eminent sense to oversee them.' There is no timescale for the change."
