Larry Bulmer hopes the FSA's rules and regulations will boost the industry by encouraging consumers to take more independent advice
The Treasury's announcement that the Financial Services Authority (FSA) is to take responsibility for the statutory regulation of general insurance has given rise to many different reactions. The Association of Medical Insurance Intermediaries (AMII), a representative body for specialist health insurance intermediaries, assists in the positive promotion of health insurance. As an organisation, we are fully supportive of the regulation of general insurance by the General Insurance Standards Council (GISC). Indeed, one of the provisos of membership of the AMII is GISC membership. Although only a fledgling organisation, the GISC had made good progress and had widespread industry support. Although a voluntary regulator, the adoption of Rule F42 ' which stated members should only deal with other members ' would have made this regulation comprehensive and effective. But without Rule F42, the effectiveness of the GISC as a regulatory organisation will always be open to question.
The announcement that the FSA would assume control of the regulation of general insurance came soon after the challenge to the Office of Fair Trading's ruling on Rule F42. Was this a mere coincidence? Or perhaps an acknowledgement that the insurance industry seems incapable of introducing effective regulation without perceived in-fighting and power struggles, with not enough attention paid to the real point of regulation ' consumer protection. For me, the announcement was inevitable. But it could also be argued that European directives have forced the Treasury's hand, although there is no evidence to back this up as yet. It has been indicated that those intermediaries and brokers that are GISC-regulated will find the transition that much easier. Does this mean that the FSA will adopt the GISC format for regulation? Obviously, elements of it will be included ' but how much? Will the FSA use a 'grandfather' rule that only applies to GISC members?
Alternatively, and perhaps more pertinent, is the fact that intermediaries who work in an ordered fashion and one that embraces regulation will be better able to adjust to the new framework. What exactly this will include has still to be decided.
We all have varying experiences and knowledge of how the FSA regulates its current products, my guess would be that the regulation of general insurance may mirror this closely. The AMII welcomes the announcement that the FSA will regulate the sale of general insurance ' with health insurance being a part of this. However, the regulation should be appropriate for the industry, not so onerous that it burdens the product with excessive additional costs. It should primarily work to protect the consumer from bad practices and encourage growth in consumers taking true independent advice.
If the FSA achieves this, then it will be a good day for all those that work in general insurance ' and particularly for those involved in health insurance where the practices of some sectors of the industry have been allowed to persist for far too long.
