Claims handling by intermediaries must be regulated, the GISC said in its response to the Treasury's statutory regulation consultation paper.

The GISC's 21-page response said excluding claims handling by intermediaries from regulation would be "a step back" from the level of protection it currently provided.

"If an activity such as claims handling warrants regulation, whoever performs the function should be subject to it."

The GISC also called for a restriction on the general insurance income earned by appointed representatives. "Persons or organisations exceeding this should be required to seek and obtain authorisation from the FSA," it said.

Meanwhile, Cila called on the Treasury to support a claims handling protocol put together by Cila and ABI. It was concerned claims handling standards would slip before the Treasury produced rules.

Consultation on the Treasury document closed last week.