Galbraith goes on the war path

FSA managing director Martin Wheatley’s speech on Wednesday, which outlined the regulator’s plans to eradicate a culture of incentivised sales in financial services, has prompted a strong response from Biba chief executive Eric Galbraith; and not before time.

In a statement released yesterday evening, Galbraith agreed with Wheatley’s message, but urged the FSA to consider preventing banks from acting as insurance intermediaries entirely.

“The FSA’s announcement is a step towards recognising the role that banks have played in the mis-selling of financial products,” Wheatley said. “However the FSA could explore the merits of adopting a similar approach to Canada where banks are prevented from directly selling general insurance products altogether.”

As the Financial Services Compensation Scheme (FSCS) fees brokers must pay have reached sky-high levels following the cost of the PPI mis-selling scandal, brokers have been eager to differentiate themselves from the organisations guilty of selling useless insurance policies, although measures to address the problem have been slow to come to fruition. A recent FSA consultation paper on the structure of the FSCS was met with a backlash from Biba after it emerged that the suggestions planned could result in some brokers paying still higher levies.

Galbraith added: “Our sector has been tarnished by the practises of other institutions, whose main business is not insurance and that have mis-sold insurance products. Banks and other organisations should focus on their core business and not be allowed to directly sell general insurance.”

There is still a long way to go to reassuring nettled brokers that they’re operating in a sensibly regulated financial marketplace, but Biba’s challenge to the FSA is a step in the right direction.