It will be a grim group of people which assembles in Cannon Street for the General Insurance Standards Council's board meeting today. The team that's worked so hard to build the new regulatory regime faces a humiliating climbdown - and one detractors will seize upon as proof that GISC is a fundamentally ill-conceived venture, doomed to failure from the start.
That is not necessarily the case. The new, most likely plan - voluntary regime for a year or so, and then mandatory - could still achieve all that the GISC's backers aspire to.
But the already difficult struggle to succeed is now made far harder still by the GISC's admission that mandatory membership is potentially illegal. As this concept has been the foundation stone of the proposed regime, its removal raises serious doubts about the entire regulatory structure and the thinking behind it. What else will suddenly change now? Will the IBRA really be repealed after all? To many brokers, this is a case of the clock striking 13 and they will find it hard to fully trust the board again.
For their part, the board's members will consider themselves victims of circumstances - and there is some justice in that defence. Consider the conundrum their political masters presented them with. Given the speedy timetable imposed by Whitehall, this was always a highly ambitious exercise. And having decided from day one that mandatory membership was the only way to ensure a level playing field, the GISC badly needed assurance that this approach was acceptable to the competition authorities.
The Office of Fair Trading was not able to give this until it had a final rule book in its hands. The GISC, to its credit, was not able to deliver this until it had consulted exhaustively, an exercise it has still not completed. And by failing to hit a March 1 deadline, it failed to buy the crucial year's protection from the new Competition Act.
GISC's critics will have a field-day. The IIB's Andrew Paddick will quite naturally say "I told you so: this is a house built on shifting sand".
Even sympathisers will be bitterly disappointed GISC did not have the courage of its convictions and is instead running scared of legal challenge.
Whenever Insurance Times raised the competition issue with GISC, we were told with a nod and a wink the OFT and Brussels were "on-side". If GISC genuinely believed this, why is it backsliding now? To claim poverty prevents it fending off any potential legal challenge is absurd. Its backers at the ABI and broker bodies would surely have found the funds to defend their creation, had the need arose.
Or would they? It's hard to escape the conclusion there has been a massive failure of nerve at GISC. The reason is not clear. But have some of its backers decided the concept is, after all, fatally flawed? There have always been whispers that many major insurers are unhappy with the compulsory aspects of GISC, fearing it might lose them premiums from brokers brave enough to ignore GISC.
Today's about-face is only likely to fuel those rumours. And until the OFT and Brussels give categoric assurances that compulsory membership is not anti-competitive, the GISC will be left twisting unhappily in the wind.
