With less than a month to go before FSA regulation begins on 14 January, many brokers will be breathing a heavy sigh of relief that the journey from self-regulation to statutory regulation is nearly over
It has been a long and arduous journey that began three years ago when the government announced its intention to bring general insurance intermediaries under the gaze of Canary Wharf.
But the reality is that 14 January 2005 is merely the beginning, not the end of a journey. With GISC left behind, brokers must now get to grips with trading under the FSA's regime - a very different beast to that of GISC.
Many predict that the FSA will be anxious to take an early scalp to demonstrate its strength. The question is who will be in the regulator's sights first? Some say that a high profile trophy, a big broker, would provide the appropriate message to the market. Others say that a crackdown on the firms that are trading without authorisation when they should be would be the most effective demonstration.
Andy Watson, head of the FSA's small business division, says that patrolling the perimeter will be a high priority of the regulator at first instance (page 15). So the early example could well be made of unauthorised secondary intermediaries and the brokers that deal with them.
With the US influencing so many things in the UK, from foreign policy to fashion trends, it is no surprise that Eliot Spitzer's investigation into the US insurance industry is sending shockwaves through the UK market.
UK brokers and insurers have been taking a long, hard look at their commission deals and the wording of the FSA rules to ensure that they are operating within the law. While FSA rules allow in principle profit share agreements and volume overriders, the industry needs to take care if they are to be allowed in practice (page 11).
