Trade bodies welcome regulator's approval for market solution
The FSA has formally confirmed ‘Industry Guidance’ status on the market solution in respect of conflicts of interest, disclosure and transparency in the commercial insurance sector for brokers.
Trade bodies; The British Insurance Brokers' Association (Biba), London and International Insurance Brokers' Association (LIIBA), Institute of Insurance Brokers (IIB) and Association of British Insurers (ABI) have all welcomed the decision.
Eric Galbraith, BIBA chief executive said: “Our members have repeatedly told us that the FSA’s concerns could be addressed by means of an industry solution. I am therefore delighted that the significant expenditure of time and effort by BIBA’s compliance team, the other associations (LIIBA, IIB and ABI) and our members has resulted in formal Industry Guidance accreditation.”
Galbraith continued: “I hope now that intermediaries will take the Industry Guidance and make the appropriate adjustments to their processes and practices. Commercial customers should expect to receive disclosures that are clear and accurate and this Industry Guidance should play an important part in helping achieve this.”
David Hough, chief executive of LIIBA, said: “We welcome the FSA’s confirmation of guidance designed to help intermediaries to provide clear information to their commercial customers about their capacity, the services being provided and their remuneration. The industry stands to benefit from commercial customers having a clearer understanding of the range of services intermediaries provide and knowing how they are remunerated”.
Barbara Bradshaw, IIB chief executive said: “The trade bodies have shown that they are willing and able to co-operate on important issues such as this. The development of industry guidance has averted any immediate prospect of mandatory commission disclosure which would have altered the complexion of the general insurance market and, in my view, reduced the availability of advice and choice for customers. The guidance will assist brokers to make more information about the services they provide available to commercial customers and should therefore address the regulator’s call for greater transparency.”
Nick Starling, director of general insurance at ABI said: "Transparency about the levels of commission earned by intermediaries, the nature of the service they provide, and the relationship they have with insurers is needed to ensure that commercial customers are able to make an informed decision about which insurance products are most appropriate to their needs. The industry guides are a welcome first step towards achieving this transparency. We look forward to the FSA's review of the effectiveness of the guidance in 2010/11."
For more, see: Video reaction: Industry Guidance.