Following a meeting between BIBA and IIB, the two broker bodies have confirmed that they are working together to address concerns raised by the FSA's discussion paper entitled 'Transparency, disclosure and conflicts of interest in the commercial insurance market' (the DP) (See: BIBA press release).
As discussed in our previous blogs, (See: Could Mandatory Disclosure of Broker Commissions be on the Cards? and IIB Sees Demise of Small Brokers if Commission Disclosure Becomes Mandatory) the DP highlighted the importance of buyers having access to clear, comparable information about the role of the intermediary, its services and the way it is paid and considered the management of intermediary conflicts of interests. In the DP, the FSA outlined possible solutions to address these perceived problems. Solutions considered included more rigorous enforcement of existing rules through a combination of further guidance and additional reporting requirements, as well as mandatory disclosure of commission. The closing date for comments on the DP was 25 June 2008. Feedback from the DP has yet to be published.
Both BIBA and IIB have separately responded to the FSA, raising concerns about the appropriateness of imposing further regulation as a solution. BIBA and IIB have reported that they are eager to move forward with an industry initiative which addresses the perceived problems. Ann Peel, IIB's Head of Technical Services, has pointed out that an industry initiative may avoid the need for more regulatory intervention from the FSA. Steve White, Head of Compliance at BIBA, also reported that BIBA is eager to engage with brokers and liaise with industry representatives to devise suitable guidelines. According to the Lloyd's Market Insurance Broker Committee, the two broker bodies may issue a joint response to the FSA addressing the transparency concerns. This response is expected after September 2008.