Small brokers and the FSA

I have just read on the front page of Insurance Times some of the comments you recently made at a recent forum for compliance consultants. If these comments have been taken out of context I apologise in advance. If they are not please explain how your need to encourage smaller brokers to give up trading rather than be regulated will protect the consumer.

Like the vast majority of the broking industry I deplore the actions of the minority. Please do not taint all brokers just because of the actions of a few.

The FSA's primary task is to protect the consumer. I, like most of the broking industry, agree with this and applaud the regulation of our industry. But, regulation of the industry and protecting the customer are two very different disciplines.

If your aim is to regulate the small broker out of existence this is not protecting the consumer. As in any industry, consumers need choice. Remove the small players and leave consumers to the whim of the fewer larger players leads to increased cost and reduction in quality in service. This happens all the time in many industries.

Any small brokers still in business have faced stiff competition over the past 10 years from banks, building societies, supermarkets and direct players.

We are still in business for two reasons. One, we are professional and offer a good personal service. Two, there is a demand for such personal service from the discerning consumer.

The FSA is in danger of 'depersonalising' our industry and distancing the consumer.

Do not under-estimate the value of the small broker to the very consumers you are supposed to be protecting.

Please clarify what the FSA will now be doing to ensure the survival of the small professional broker.

Name and address withheld

15 years wasted
I support a family in a region where alternative employment is scarce. Any proceeds from a business sale would be limited and my own efforts over the past 15 years wasted.

Having spent much time, money and effort in getting suitably educated, qualified and experienced in the sale of general insurance products his comments are not appreciated.

Mr Harris should reflect on the fact that at the outset of compulsory regulation we were promised that the FSA would listen, be fair and more importantly proportionate.

We based our decision to continue trading on this information and our existing business plans were modified. Encouraging us to pack up because the costs have turned out to be disproportionate would be hypocritical.

In addition, if pricing otherwise viable small businesses out of the insurance market place is deemed to be in the interest of customers, the FSA clearly hasn't spoken to any of mine.

G Skirrow
Skirrow Insurance Services

The FSA responds
Your front page report misdescribes our approach to small firms overall.

We are absolutely not, as was suggested, encouraging smaller intermediaries to leave the general insurance market or to consider doing so. We do recognise that for many thousands of small firms statutory regulation is new, but the whole basis of our approach is to help these firms to adjust so that they can continue to trade effectively in the new regulatory environment.

We do this by communicating with smaller brokers in a number of ways and have put in place a number of initiatives to make the FSA easier to do business with for small firms. These include our Firm Contact Centre, and Firms Online which allows firms to submit returns; make certain applications and inform us of changes to their details electronically.

We have begun a series of visits, roadshows and surgeries around the country at which firms can ask questions. We also run a wide programme of industry training events and there is a wealth of information on our website including dedicated pages for general insurance business and a tailored version of the FSA Handbook.

I understand that a number of brokers have been in touch with you since your report expressing concern and I hope this letter will allay any concerns firm may have as a result of your article.

I have copied this letter to Biba for information.

Andrew Honey
Insurance department, small firms division FSA