GISC will remain in place until FSA statutory regulations come into play, says Tiner
The FSA has stated that the GISC remains the best method of consumer protection until statutory regulation comes into force.
While there is still no timetable for the change, the assurances of future recognition for GISC membership have been confirmed in a letter from John Tiner, managing director of the FSA's Consumer, Investment and Insurance Directorate, to Chris Woodburn, GISC chief executive.
It reads: 'The FSA considers that it is in the best interests of consumers and the financial services industry that GISC remains effective during the transitional period.
'The Economic Secretary to the Treasury [Ruth Kelly MP] stated that the FSA will be looking into the authorisation process to give due credit to those firms which are members in good standing of GISC or comparable organisations. The FSA is committed to this principle, but it will be some time before we will be able to establish what this means in practice.'
At the moment, it seems that nobody has even the vaguest idea of what form this credit might take. Woodburn said: 'The idea is that if someone is in good standing with the GISC and comes forward for authorisation by the FSA, then they should find it easier to pass through the authorisation gateway than if they were unregulated. But for the moment there is no flesh on that, as the FSA has no legislation in place and has not decided what its approach will be. I don't know what this might mean in practice.'
The news of the FSA announcement has prompted a significant number of companies, whose applications were on hold until the GISC's position was clarified, to supply the outstanding additional information requested by GISC to enable them to proceed with their applications.
The GISC continues to receive a steady stream of applications, outweighing the small number of companies seeking to cancel their membership.
Meanwhile, the Association of Insurance Intermediaries and Brokers (AIIB) has confirmed its support for the GISC.
Mike Slack, chairman of the AIIB, said: 'We are disappointed at the Treasury's decision. But we will continue our support of the GISC during the transition period to FSA regulation.'
However, the association is concerned that the European directive on Insurance Intermediaries, which spurred the Treasury's decision, applies only to organisations with insurance as a core business.
Travel agents, banks and those which only sell insurance as a secondary business will be exempt from FSA regulation.
Slack said: 'The opportunity to create the longed for level playing field for all those selling general insurance has been missed.'
