The BIBA has long been fed up with the workings of the FSA. It has fought tirelessly to ensure that regulation within the general insurance sector is as fair and measured as it could be. It also fought tirelessly on the particular issue of travel agents and making sure that they operate on the same level playing field as brokers and are regulated in the same way. The BIBA has won this battle, but now the FSA is undermining bokers with the small print in the regulation. The BIBA's position is a clear one: “We believe that the consumer should be entitled to the same suite of disclosures, irrespective of where they choose to buy their insurance. Having a differential disclosure regime is likely to lead to consumer confusion and potential detriment.”
The issue at hand is that travel agents that sell insurance alongside holidays are set to benefit from an unfair advantage as they will not have to provide the same degree of transparency. Whilst there are some proposals that are welcomed by BIBA but the FSA has said that it intends to relax the process of transparency for the travel agents as well as direct insurers.
The FSA is basically saying that travel agents would not have to abide by the Euro law the Insurance Mediation Disclosure and would not have to state whether products offered were from a range or limited number of insurers. Nor would they have to provide consumers with a statement on the reasons for advice given. So basically consumers would be none the wiser whether they are getting any choice of insurance products and worse still are none the wiser to whether they should be asking this question anyway.
The consultation closed on Tuesday and the FSA will publish its final proposals, and is due to start regulating the sale of travel insurance with holidays from 1 January 2009.
The FSA has come along way over the last three years. It is now embarking on a review of conflicts of interest on top of its review of commission disclosure. Lets hope that it can continue to focus on the issues that it has already raised and ensure that these are properly addressed before it moves on to its next set of pressing issues. Otherwise any remaining goodwill from the broking sector will be lost and it will find that the reasonable voices it currently has around the lobbying table will begin to become more and more agitated.
