Numbers of GISC members expected to fall following ruling by the Competition Commission Appeal Tribunal
Advisers will no longer have to join the General Insurance Standards Council (GISC) in order to conduct general insurance business, including private medical insurance (PMI), following a ruling by the Competition Commission Appeal Tribunal.
The regulator's Rule F42 ' which states GISC members are only able to transact general insurance business with fellow members ' was found to be in breach of the Competition Act, following appeals by intermediary bodies, the Institute of Insurance Brokers (IIB) and the Association of British Travel Agents (ABTA).
The move means that unless the GISC is made exempt from the Competition Act, advisers will no longer have to join the body, or incur dual fees due to additional regulation.
Catherine Nicoll, head of communications at the GISC, said member numbers, especially for those working in specialist areas such as PMI, were expected to fall. 'We are confident the core insurance industry will continue to come on board, but niche sectors which we had made progress with may now be deterred. Some people have written to us asking for a return of fee and resigning. It is possible we will see more people doing the same.'
But Michael Payne, proprietor of Healthplan, said he would remain a member of the GISC, despite the ruling. 'We were one of the first companies to join the GISC and it was not for the sole reason that membership would be compulsory. The GISC still has an important role to play in policing the industry ' especially with PMI.'
Payne did, however, air fears that industry standards may fall without compulsory regulation. 'It is concerning that there are other people out there who are able to sell PMI without the presence of an official regulator,' he said.
Paul Smee, chairman of the Association of Independent Financial Advisers (AIFA), said although the ruling would help those advisers who were struggling with dual fees, it was likely that regulation would eventually be forced on the sector.
'Time will have to be taken to reflect on the issue so we can make sure that regulation is implemented in the best way. My belief is that there is no real value in dual fees for certain products such as waiver of premium. But I do not believe this marks the end of general insurance regulation. We now need to focus and see if we can come up with a sensible solution.'
Nicoll added that the GISC would be looking to reward those advisers who remained members. 'We do realise we owe something to people who have joined and are planning to give something back in terms of public credibility. Those who have taken the plunge and joined will be actively promoted by the GISC as a sign of their commitment to consumer care,' she said.
