The broking market has been getting excited today by a rather plain statement uttered by an equally plain Eurocrat. Actually, that’s not fair. Michel Barnier, the European Commission who has caused all the excitement, looks rather dapper and suave – not at all the clichéd, grey, bespectacled Euro MP of yore. That role, as I’m sure we are all well aware, is reserved for the Belgians and the British.
Anyway, Mr Barnier said something that has got people excited. He told delegates at the European Federation of Insurance and Financial Intermediaries conference, that the industry needed to be regulated in an “appropriate, effective and intelligent way”. He also said he recognised that the insurance sector was not the cause of the ongoing financial crisis.
Heady stuff I’m sure you’ll agree. Pretty radical too. Prior to hearing Mr Barnier’s comments most in the insurance broking market probably thought that what they really required was inappropriate, ineffective and unintelligent regulation and that the banks had nothing to do with the credit crunch.
So why is everyone, including our very own Biba, getting excited? The main reason is that the review of the Insurance Mediation Directive is well underway and Mr Barnier will be one of the chief architects of its contents. The IMD will, to a large extent, dictate how brokers here and across Europe will conduct business for the next ten years at least.
Biba are particularly excited by the comments as the language used mirrors their own. They have been calling for appropriate and proportionate regulation for some time now and at last it looks like they have had an impact at a European level. Hats off to the boys at Biba for that.
In addition, Mr Barnier’s statements are important as they come hot on the heels of Biba’s warning that mandatory commission disclosure, dictated by the revised IMD, was a distinct possibility. Mr Barnier has dampened that fire somewhat with his comments.
But in among the relief and clamouring to welcome his statements, the market would do well to bear in mind that these are just words. What the final rules will look like is anyone’s guess and it is concerning that we are receiving somewhat mixed messages.
On the one hand, brokers are being warned to prepare themselves for mandatory commission disclosure and regardless of your views on this, it will be disruptive and be seen as unnecessary interference in the UK market.
But then on the other, the friendly face of Mr Barnier is telling the market that regulation for insurance should be appropriate and hinting that it will not be punished for the sins of banking.
If I was a broker, I wouldn’t be celebrating just yet – these conflicting statements do little more than make it clear that anything could come out of this review. The market is not out of the woods yet so I’d advise brokers to put away the party hats for now.