Despite Tony Cornell's warning in last week's issue, Angela Darling reckons joining the GISC will be the best preparation for regulation
In response to "If it ain't broke..." (7 March, Insurance Times) I must point out that Tony Cornell's opinion may well be shared by some brokers, but the danger for them is that it is based on some false assumptions.
First, it might be unwise to believe insurers won't consider cancelling agencies because the General Insurance Standards Council (GISC) will cease in 2004. The Financial Services Authority (FSA) November 2001 report "The future regulation of insurance" suggests insurers will be expected to take reasonable steps to ensure that the business of a firm distributing their products is organised and controlled effectively, and indicates the FSA may monitor more closely insurers who do not have effective controls. For this reason insurers may, from their own regulatory perspective, prefer to deal with appropriately regulated intermediaries.
Second, awareness of the GISC is growing fast: public recognition from the industry, government, FSA, and consumer bodies; participation in two phone-in programmes on BBC Radio 4 MoneyBox Live; a regular slot on LBC Radio's "Making Money" programme, with an audience of 750,000 in Greater London; regional radio interviews; and a feature in Which? magazine highlighting the GISC's website as one of the best sources of financial information. References to the GISC in radio and TV advertisements are increasing and calls to the GISC and hits to our website membership list suggest consumers are actively seeking GISC members.
Two years is a very short time, and I strongly urge businesses to act now. The FSA (supported by Ruth Kelly) has confirmed, in respect of the authorisation process, its commitment to the principle of giving due credit to those firms that are members of GISC.
It will be some time before the FSA explains what this means in practice, but it will set criteria for authorisation. Businesses will have to meet the set criteria in order to obtain authorisation, and those unable to evidence compliance with GISC standards may find it more difficult or even impossible to obtain authorisation.
In addition, businesses that already have experience of understanding modern regulatory rules, mapping their existing practices against them, and implementing and maintaining compliance will, in my opinion, be better prepared, and have more confidence in their ability, to assess and to meet FSA requirements. Investment in compliance should underpin business goals. Starting in good time will assist this process.
Brokers should no longer see the GISC as a problem. On the contrary, we are now the solution.
