Letter from GISC advising members of FSA credit angers institute chief
A row is brewing between the GISC, the FSA and the Institute of Insurance Brokers (IIB) over grandfather rights for brokers.
IIB director general Andrew Paddick has written to FSA managing director John Tiner complaining that the GISC is overstating the amount of credit that its members will receive when they apply for FSA authorisation.
The row centres on a letter circulated by GISC on 3 April from Tiner to GISC chairman Anthony Howland-Jackson. Paddick claimed that the letter inferred that GISC members would be grandfathered into the FSA-regulated regime.
"While I appreciate how carefully the letter is worded, many firms have, nonetheless, interpreted it as meaning that if they are compliant GISC members, then FSA authorisation is almost guaranteed," Paddick's letter said.
"This causes me enormous concern, because I know that it will lull some firms into a false sense of security, which could cause them serious problems next year," it added.
"I quite understand the desirability of maintaining the GISC until 2005 and that many of its disciplines will help 'pave the way' towards FSA regulation, however, the impression given goes far beyond this.
"Our regulatory division (IIBRC) has had meetings with your colleagues regarding the words first uttered by Ruth Kelly, namely 'due credit'.
"The IIBRC has been extremely careful so as not to raise the expectations which may not be eventually delivered, with regard to any 'due credit' - because it has yet to be properly defined," Paddick added.
He added that on the basis of the letter: " A London Market broker I had lunch with recently said: 'We will all be grandfathered into the FSA, it is not going to stop any firms like us trading'."
Paddick wants Tiner to clarify the situation to "intermediaries who may have completely misunderstood the situation".