Biba's critical response to the GISC consultative document shows just how much work Chris Woodburn and his team still have to do before they can create a broadly acceptable regulatory regime.
The surprisingly long list of objections from the brokers' trade body covers most of the key planks in the proposed regulatory platform. On the fundamental issues of capital adequacy requirements, professional indemnity limits, complaints handling, and even the make-up of the GISC board itself, Biba is at odds with the proposed regulatory framework.
There is something very odd about this – and understanding what's going on may reveal the real dynamics at the heart of GISC. For isn't it strange that broker representatives, including some from Biba, should have been discussing all these issues as GISC board members for so many months – and yet still been unable to help produce a consultative document that better suited their members' needs?
Three possible explanations spring to mind. Either the broker representatives – who let's remember, make up the majority of the board – were outmanoeuvred by the insurers when it came to drafting the document. Or the broker representatives are out of touch with their members. Or Chris Woodburn's consumer instincts have led him to draft a document that goes further than the GISC's brokers and insurers would like.
How the GISC board reacts to the feedback should give a clearer indication of which of these scenarios is correct. And at this stage, no one can tell how Mr Woodburn and his board will jump. All the financial issues that Biba takes exception to – PI limits, capital adequacy, complaints handling costs and compliance monitoring costs – are issues that the Woodburn and his board may well feel honour-bound to resist on public interest grounds. They have said from the start that the GISC's guiding principle is consumer protection. It might look feeble to roll over as soon as brokers started grumbling about measures designed to protect consumers.
The problem then for GISC is that it may find itself trying to impose upon the broking industry a set of unpopular measures. And although the GISC's lodestar has been consumer protection, it has been worldly enough to know its new regime can only work with widespread co-operation and support from the industry.
Luckily for GISC, time is on its side. The repeal of the Insurance Brokers' Registration Act is now unlikely before next year. This gives plenty of time for a compromise to be reached – but that, in itself, makes Woodburn's task no easier.
All those close to the workings of GISC have remarked regularly on how unconfrontational relations have been. The hard decisions ahead may challenge that cordiality to the limits.
