- There are several opportunities to develop a more proportional regulatory framework which could improve processes and customer outcomes. This is key to stimulate growth in financial services and the economy as a whole and reduce the cost of regulation to customers and firms alike.
- Outlining the opportunity to reduce the scope of the Consumer Duty to align with its intended purpose of protecting less sophisticated buyers of insurance.
- The Consumer Duty brought an opportunity to simplify and streamline the FCA’s rulebook. BIBA has identified at least 11 ICOBS that could be removed entirely and further rules that could be reformed plus other refinements.
- The regulator needs to consider the impact its ever-increasing volumes of information requests have on firms of all shapes and sizes, both in terms of costs and time pressure.
- Authorisations are a pinch point in the regulatory framework and the process has a huge impact on the introduction of new firms and or new permissions. We call for a simpler speedier process to benefit our sector and its international competitiveness.
- The FCA’s competitiveness objective is welcome and the metrics around its implementation need to drive understanding of regulatory scrutiny and UK financial services’ international competitiveness.
We welcome the regulator’s greater engagement with our sector through meeting many of our members at the BIBA conference, roundtable discussions and by attending our 11 regional events in 2024. This interaction helps the regulator develop a deeper understanding of how regulated firms of different sizes operate and the practical application of new or proposed rules to each segment.
The introduction of the secondary objective on growth and international competitiveness, plus the creation of the Financial Services Regulation Committee (FSRC) to provide additional parliamentary scrutiny of the financial services regulators, contribute to an effective framework that will support a healthy competitive marketplace that enables good outcomes for insurance buyers and maintain strong consumer protection.
Insurance brokers help support sustainable economic growth and business resilience with financial protection products. But more needs to be done to calibrate regulation to better reflect and serve the different characteristics of consumers and commercial customers and that focus the regulator’s activities on those areas judged to represent the greater theoretical risk of harm.
Key to this is an increased understanding and acknowledgement of the considerable variance in size and types of regulated firms, to understand the impact of regulatory actions on the insurance broking sector. A more tailored approach is needed to mitigate the variance in potential harm to consumers from different distribution models.
The cost of regulation is an important element as ultimately it impacts buyers through increased insurance premiums. Costs can accrue through disproportionate regulation and can impact the number of market participants and reducing numbers ultimately reduces choice, which is a driver of competition and lower costs in the market. The burden of regulation itself must provide fair value for the benefit (outcome) derived.
We believe there are several opportunities for the regulator to improve the regulatory process and outcomes.
We welcome regulation that supports consumers and ensures the integrity and stability of the system; but consumer-focused regulation is disproportionate for business clients.
Speed up authorisations
Remove unnecessary FCA rules
Reform product value/fair value assessment regime
Improved metrics
Streamline reporting requirements
Reduce the scope of the Consumer Duty