The Financial Services Authority and the Financial Services Ombudsman Scheme have proposed that the Insurance Ombudsman's jurisdiction should be extended to cover small businesses' insurance complaints.
In their latest consultation document, the FSA and FSOS said firms with under five employees or an annual turnover under £1 million should be allowed to take complaints to the Insurance Ombudsman.
Recently, it was proposed that brokers would have to pay a £500 levy every time they were subject to a complaint to the Ombudsman. With 3.2 million small businesses in the UK last year, this could mean an increased regulatory bill for brokers.
The document says: "We recognise that this will be a new departure for the insurance sector, but believe that there is a compelling case for extending this to all financial industry sectors."
The ABI gave the proposals cautious backing. Deputy director general Tony Baker said: "There has always been a gap that the Ombudsman has been keen to plug. Where a small company is really the equivalent of an individual, I don't think the insurance industry would disagree with that.
"It is a question of drawing a line where the companies are professional enough and big enough to take responsibility for their own acts. It is about finding the right line.
"The levels proposed by the FSA and FSOS seem sensible, but we are checking with our members to see if it corresponds with their views."
Another key FSA/FSOS proposal was that the ombudsman should accept third party complaints. This would mean the following groups having the right to complain to the Ombudsman:
- insured persons – even if they are not the policyholders (eg named drivers on a car insurance policy)
- people giving a guarantee or security for a loan or a mortgage
- traders who rely on a cheque guarantee card
- beneficiaries where the firm is trustee of an estate, provided the complaint is made jointly by all the people concerned.
q See page five for new Insurance Ombudsman.