Insurance broker fears they may be caught by draconian regulations were eased today, after a European Commissioner suggested they could be set for reprieve.
Coming just a month after British Insurance Brokers Association CEO Eric Galbraith declared to members that commission disclosure would be ‘inevitable’, European Commissioner Michel Barnier told the insurance and financial intermediary sector that the revision of the Insurance Mediation Directive (IMD II) is “an important step in restoring consumer confidence in the financial sector” and that “every financial operator must be regulated and monitored in an appropriate, effective and intelligent way.”
While addressing the European Federation of Insurance and Financial Intermediaries (BIPAR) conference at the European Parliament last week, Commissioner Barnier recognised that the insurance sector is not at the origin of the financial crisis and must be differentiated from the banking sector.
Ahead of the publication of the revised IMD I and the proposed packaged retail investment products (PRIPs) regulation, Commissioner Barnier said that he wants a “proportionate approach” and assured that proposed rules will be balanced and take into account the specificity of the sector.
BIBA said it was pleased that Commissioner Barnier said that the scope of the IMD II will include all those who sell insurance as consumers are entitled to the same information and protection wherever they buy their cover. He also said that the world had changed since the original IMD so that there was going to be a “real breakthrough on transparency and conflicts of interest”.
Responding to Commissioner Barnier, Paul Carty, BIPAR Chairman, welcomed the approach to enhance consumer protection and said: “We need the legislation to be proportionate, allow choice and not distort competition. Achieving a level playing field for consumers and intermediaries is very important to us. The insurance sector did not start the financial crisis and we are different to other sectors of financial services, but we are willing to play our part.”
Eric Galbraith, BIBA Chief Executive, added: “We are pleased that the scope of the revised IMD will include all those selling or advising on insurance but have concerns that changes to the process of transparency will lead to additional costs, and no benefits to consumers or small businesses.
“I would urge our new regulator, the FCA, and the UK government to work with the sector and to engage with the European Insurance and Occupational Pensions Authority (EIOPA) in order to ensure the UK maintains its world leading position on risk management and insurance protection.
“60% of the costs of EIOPA are paid by member states and we have to question the value of this to theUK. There must be cost oversight and accountability. Regulatory costs in the UK are already disproportionately high.”