The FSA’s latest fees and levies bill are not so much a wall-up call as a call to arms. Now is the time to unite for our cause
There is nothing quite like having to shell out lots of cold, hard cash to focus the mind. You can rail against an injustice all you like, but often it is only when people see actual figures next to a pound sign that they realise just how much something is going to hurt them.
The FSA’s regulatory fees and levies for 2010/11 are a case in point. For the past couple of years, Biba has been warning about the rocketing cost of regulation to anyone who would listen.
Well, now those FSA fee and levy invoices have come home to roost. Members have been asking whether there has been a horrible mistake in the calculation of their contribution towards the upkeep of the regulatory infrastructure. One member reported that their Financial Services Compensation Scheme (FSCS) levy had rocketed, increasing eight-fold since last year from £4,300 to £34,600. Sadly, it is a story that is being repeated up and down the country to a lesser or even greater degree.
It is the FSCS component of these demands that demonstrates everything Biba has been saying about the unfairness of the model – that the FSCS structure is fundamentally flawed. The FSA is currently undertaking a review of the FSCS funding model, and Biba has been playing an active role in this. One of the challenges will be
to demonstrate the strength and stability of a separate ‘broking’ sector within a revised FSCS. Members are encouraged to work with Biba in the consultation process, which is expected to commence in late 2010.
In the new regulatory environment, we need to robustly ring-fence the professional insurance broker both in the style and cost of regulation if we are to avoid having to pay for future mistakes not of our making. Ours is currently a very wide-ranging sector in terms of regulation, and to deal with this properly the regulator needs to first recognise greater segmentation. Secondly, let us have a detailed examination of past and possible future issues – both for retail and for wholesale business.
Clearly, during the past few years the problems have come from organisations whose main concern is not insurance broking. Unless the business is undertaken by an organisation that is wholly immersed in, and suitably qualified to be in, the general insurance business, we will continue to have these problems.
Last week Mark Hoban, the financial secretary to the Treasury, set out the government’s plans to reform the institutional framework for financial regulation. The industry now has a very real opportunity to influence this proposed new regime. Five years ago, we were shoehorned into an unsuitable regulatory environment designed for others in the financial services sector, so let us make sure that it does not happen again.
Hopefully, the government will now embrace this opportunity to undertake a genuine consultation process during the transition to the new regime and not just change the name on the door. The current style of regulation is unnecessary for our sector, and the cost is totally disproportionate to the risks involved.
Biba will be looking to play a key part in the consultation process and will work with members to actively encourage them to lend their voice – you are the ones funding it after all.
So do not let fatigue set in. Whether you are a small broker or a large broker, a retail broker or a wholesale broker, this is an opportunity to put forward your argument. We might not succeed in all that we want, but we need to continue to press our case so that we can say we did our best. IT
Eric Galbraith is chief executive of Biba