With the appeal against the General Insurance Standards Council's (GISC) controversial Rule F42 uphe...
With the appeal against the General Insurance Standards Council's (GISC) controversial Rule F42 upheld by the Competition Commission in September, it looks as if, for the time being at least, the GISC will remain a voluntary body for the general insurance industry.
The GISC will now seek an alternative route to enforce F42, by applying for an 'exemption' from the Office of Fair Trading, but this application alone is expected to take four months. Even if this is granted, the Institute of Insurance Brokers, one of the parties to bring the original appeal against F42, has already promised it will lodge a further appeal with the Competition Commission.
While many general insurance brokers will feel frustrated by this outcome, seeing the opportunity to bring an image of professionalism to their industry fade, IFAs across the country must be breathing a collective sigh of relief.
To them, the GISC represents another level of regulation and with it, another set of compliance requirements and another set of fees. Had Rule F42 gone through, any IFA selling general insurance in no matter what quantity would have had to have joined the GISC in order to continue to do so.
'General insurance' in the GISC's rulebook does not just include the obvious candidates such as mortgage payment protection and private medical insurance, but also waiver of premium ' the cornerstone of protection and not a product any IFA can ignore under 'best advice' requirements. Given this, F42 would mean join up, or give up, for potentially every IFA in the country.
The Competition Commission's decision therefore could be a blessing in disguise, giving IFAs a temporary reprieve, but also allowing the GISC itself some breathing space to revisit and review its rulebook. Let us hope it uses the time wisely to consider more carefully which products come under its remit and what special concessions it could put in place to prevent double or triple regulation for those who sell a range of financial services products.
Having a number of different regulators policing financial services was never going to be easy nor ideal, particularly for those providing advice across the board, but now that we have it, it is essential all parties engage in continuous and pragmatic dialogue with each other to ensure regulation is fair, sensible and above all, achievable.
On the subject of regulation, it is ludicrous that term assurance, critical illness and the most complex of protection products, income protection, continue to remain outside the jurisdiction of any of the industry's regulators. These products come in to play when people are at their most vulnerable ' when they are either seriously ill or bereaved ' and therefore it is crucial they are sold responsibly. The majority of IFAs will already sell these products as if they were regulated, but this does not mean that mis-selling cannot and does not take place ' it does.
Once again communication is key. It is up to the industry as a whole ' IFAs, agents, insurers, working parties and trade bodies ' to lobby the regulators to ensure that regulation is consistent and comprehensive, wherever it is coming from.
