IIB director general Andrew Paddick this week rubbished claims that the GISC can obtain clearance from the Office of Fair Trading to compel brokers and intermediaries to become members.
Paddick claims that only an Act of Parliament can grant a regulatory body such powers.
His attack followed GISC's confirmation that it will start life offering membership on a voluntary basis. But the GISC will seek clearance from the OFT when its rulebook is complete some time later this year.
Any compulsory element would be provided by insurers agreeing to cancel agencies of intermediaries and brokers which do not sign up to GISC.
"The OFT has no powers to authorise anything and there is no such thing as OFT clearance," Paddick said.
"GISC keeps saying it will get approval, but these bodies cannot approve things. The OFT cannot clear restrictive trade agreements and neither can Brussels."
And Paddick warned that the IIB is almost certain to mount a legal challenge against any rulebook that demands enforced membership.
"We would challenge a mandatory rule book unless it clearly demonstrated that all its members are up to IBRC standards," he said.
In a statement issued by the GISC this week it expressed confidence that it will meet all legal requirements.
"GISC is in close contact with competition authorities, (including the OFT). Like self-regulatory organisations before, GISC will make the appropriate notifications for clearance," the statement read.
"The principle that insurers deal only with registered intermediaries is expected to be a EU requirement.
"The introduction of such a rule by GISC will be subject to appropriate notification under competition law at the relevant time."
Paddick also said the fact that the GISC will start as a voluntary body will cause the regulator serious problems in attracting members.
He said: "If it is a voluntary body with a sensible regime and properly audited accounts, then a lot of firms will not want to join. But it is the ones who don't want to join that will cause the problems."
A spokeswoman for the OFT said the competition watchdog would look at any rulebook it received and provide GISC "guidance" on any issues that could be anti-competitive.
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