The Institute of Insurance Brokers (IIB) has threatened to sue the Insurance Brokers' Registration Council (IBRC) because the IIB will lose out financially after the IBRC's decision not to bill brokers.

The IIB has run the IBRC's back-office since October 1998 but was stunned by the council's decision in November to waive fees due after January 1, 2001.

IBRC chairman Alan Gavaghan has accused the IIB of “over reacting” in threatening to sue it for stopping the collection of membership fees .

The legal row exploded following what is believed to be an increasingly fraught exchange of letters between the IIB and an IBRC council member.

The correspondence highlights the IIB's concern that it may lose revenue from administering the collection of IBRC membership fees.

Alan Gavaghan said he could not comment directly on the details of its contract with the IIB, because of a confidentiality agreement. But Insurance Times understands that the IIB gets a fixed fee plus a percentage of the IBRC income.

Gavaghan said, any threat of legal action from the IIB would be an “over reaction” as both parties have yet to have substantive talks on the issue.

He said the decision to waive renewal fees for individual and partner brokers for the four months leading up to the repeal of the Insurance Brokers Registration Act on April 30, 2001, had the full support of the Treasury and IBRC leaders.

“This decision is in the best interests of the broking community. Our responsibility is to brokers and not to the IIB,” Gavaghan said. “It is clear that any payments made to any outside contractor by IBRC will be in direct ratio to the work done.”

With no billing, debt chasing or banking of cheques, the workload will be substantially reduced.

Gavaghan added that the IBRC has sufficient funds to continue its work up to April 2001, and would do its utmost to maintain its relationship with the IIB. IIB director general Andrew Paddick refused to comment.