Compulsory regulation is sure to replace the GISC at some stage in the future, writes Iain McMillan
We were surprised by the Competition Commission's ruling against the Office of Fair Trading (OFT) over its sanctioning of the GISC Rules ' specifically against Rule F42 prohibiting members from doing business with non-members.
But was the Competition Commission Appeals Tribunal right to uphold appeals by the Institute of Insurance Brokers and the Association of British Travel Agents against Rule F42?
In a word, yes. The General Insurance Standards Council (GISC) has accepted that on a point of law, the OFT should not have given clearance to the rule, but believes an exemption could have been granted on the grounds that regulation was for the benefit of the consumer.
The current situation means that for the moment, the future of the GISC is less than clear. Having taken time to digest the findings of the Competition Commission, the GISC has stated that it intends to ask the Director General of the OFT to consider an application for exemption, as mentioned above.
However, there appears little doubt that if this exemption is approved, further appeals will be made by various bodies in the same manner that have just been witnessed.
We have concerns about the resulting uncertainty and delay for both insurers and intermediaries. It will be the consumer who loses out while these issues are being resolved, as effective regulation ensures fair and consistent treatment ' and for the private medical insurance (PMI) market to move forward customer confidence is vital. We are now fast approaching the end of another year, and yet seem to be no further forward on the subject of a single regulator for the general insurance industry.
But for the moment, it is business as usual for intermediaries dealing with PMI products. Membership of the GISC is not required to enable intermediaries to give advice and sell these products to their clients. Clients of intermediaries will continue to receive unbiased independent advice from someone they trust, and there is no need for intermediaries to seek 'introducer status' from any one insurer and refer clients to them, irrespective of their needs.
Whichever route is selected by the GISC, I believe that if rule F42 does not exist in future, then ultimately the concept of self-regulation will fail. This will not be the end of the matter however, as compulsory regulation is sure to replace it at some stage in the future.
We remain committed to the GISC and we believe that regulation of the general insurance market is in the best interest of consumer protection and customer service.
We do feel, however, that for intermediaries, another form of compliance on top of that already required in the regulated market is unnecessary. But we suggest that the GISC gives serious consideration to accepting PIA compliance as equal to its own, for those intermediaries who wish to sell PMI and other similar protection products.
