We are encouraged by the FCA’s consultation on how it could simplify and streamline its rulebook and rely on the Consumer Duty to achieve the regulator’s objective for appropriate consumer protection. In our response to the consultation BIBA highlighted at least 11 ICOBS rules that could be removed entirely and further rules which could be reformed or enhanced. We believe this approach would help firms meet their regulatory obligations in a way that fits their operating model whilst maintaining protection for consumers. Simplifying the Retail Conduct Rules will attract investment into the UK as investors will be more confident in their understanding and meeting regulatory requirements without the burden that the existing, prescriptive regulations create. Economic growth and attracting international businesses to the UK is vital. When investors are faced with less complicated and burdensome regulations from other overseas markets, they may be less likely to invest in the UK.
The impact of the UK’s current regulatory handbook can be seen in the declining number of general insurance intermediaries. Many businesses exiting the market cite regulatory burden as the primary reason for their exit.
Number of UK General Insurance Intermediaries
Recently the FCA has introduced examples of good and poor practice in their thematic review findings. However, examples for the range of different sized firms across the sector would be welcome.
The way firms are interpreting the current product value and fair value assessment requirements that apply to insurers and intermediaries involves unnecessary duplication, is resource heavy and embodies an ‘unintended’ burden on our members.
A typical insurance broker that might distribute 20 products from 50 insurers is expected to complete 1,000 fair value assessments. This equates to thousands of hours spent by insurance brokers. Despite the positive intentions that the regulator began with, the execution has created an unreasonable burden affecting broker productivity.
Chart source: FCA Data Bulletins