It occurred to me, at a recent Western Provident Association (WPA) PMI Masterclass, that there may not be many PMI specialist intermediaries left by the time the FSA finally gets around to consulting on the regulation of the sector.
The fears expressed by some of my fellow attendees on the course highlighted the huge potential for confusion and misunderstanding that the FSA seems to have allowed to build up.
It would be a real shame if some of these fine and dedicated intermediaries decided to bow out of the industry now, prior to finding out exactly what the FSA expects of them. But from what I heard on the day, it seems that some may be contemplating such a move.
It’s easy to say that the FSA should have handled its PR engine better, but in fairness the regulator is unable to comment and reply to queries connected to an issue that it is currently learning about itself and hasn’t yet fully consulted on.
Going back to the WPA training day, it was excellent in many respects (ie it looked at the wider issues affecting the PMI market and discussed underwriting, pricing and health trusts in a very useful and comprehensive way, without reverting to a “sales pitch” for the company).
That said, the discussion about regulation succeeded, if that was the intention, in putting the fear of God into all of the intermediary attendees. Intermediaries should quite rightly be made aware that changes are afoot and that they will need to plan for these changes.
But, at the same time, it should be pointed out that statutory regulation is not being introduced, in this case, because the FSA is concerned about the potential for wrong-doing, or mis-selling, in the PMI and protection sectors, it has come about purely as a result of a Directive from Europe. So it must be assumed, or rather hoped, that a “lighter touch” form of regulation will be applied to the industry.
We also have it on good authority that the FSA will probably not be interested in carrying out costly and time consuming compliance visits to specialist intermediary firms (again, because regulation is not being introduced because of any mis-selling issues in the industry).
John Tiner, managing director of the FSA Consumer, Investment and Insurance Directorate, also recently stated that intermediary firms that have already satisfied GISC requirements will receive some kind of credit in the FSA’s authorisation process, so it is to be hoped that the “change-over” process will not prove to be too costly and onerous.
However, if these hopes/assumptions are not translated into reality in the FSA’s consultation document (which, at the time of going to press had not yet been published) then it is up to the industry to put it right.
Rather than bowing out before the changes are implemented, have your say in shaping those changes to suit your needs.
Suzanne Clarkson – Editor