FSA moves to examine rules in anticipation of Davidson Review changes
The government-backed Davidson Review will see brokers weighed down with 'gold plated' regulatory burdens while rules for direct writers will be further relaxed.
The Davidson Review was announced by the Cabinet Office in March. It will review how the UK puts EU legislation into practice and identify where there is over implementation or gold plating.
Neil Davidson QC, former solicitor general for Scotland, will head the review and make recommendations to cut regulatory red tape.
Last week, the FSA announced it was looking at general insurance conduct of business (ICOB) rules to see if there could be further easing of the regime, such as in motor and household insurance.
Compliance experts see this as evidence of the FSA gearing up to meet Davidson recommendations. It is understood the pressure is on the regulator, not only from direct writers, but also on government departments such as the Treasury and bodies such as the Better Regulation Taskforce.
Yet brokers are unable to escape the red tape because they are bound by the Insurance Mediation Directive (IMD).
"The FSA is under huge pressure to cut out excessive gold plating. But, at Biba, we've never criticised the regulator for this as we felt it helped in consumer protection," said Biba's head of compliance and training, Steve White.
When the IMD was introduced in January 2005, the FSA decided to gold plate rules that would extend disclosure to both brokers and direct writers.
White said Biba was dismayed when, last December, the FSA decided to lift some of the disclosure rules for direct writers. "We feel many people don't know the difference between the AA and Direct Line."
He added that direct writers now also had a competitive advantage over brokers when handling call centre business because calls with less disclosure were quicker.
White said: "We believe the way the IMD has been implemented has been a contributory factor to the cost of regulation. Given the success of self regulation under GISC, we believe the IMD as currently constituted represents gold plating and cannot be considered proportionate."