Treasury announcement spells end of GISC, but makes life simpler for IFAs
The Treasury's decision to expand the Financial Services Authority's (FSA) remit to general insurance broking may mark the end of the General Insurance Standards Council (GISC).
It is thought the decision has been influenced by upcoming European legislation.
The Insurance Intermediaries Directive (IID) was agreed by the Council of Ministers on 26 November. The IID will require member states to introduce regulation of persons conducting general insurance and reinsurance mediation.
Economic secretary Ruth Kelly said the decision would make life simpler for advisers operating in a number of different markets as well as opening up a number of new opportunities.
She said: 'Brokers who deal in two or more lines of regulated business will deal with a single regulator, not several, and will be able to compete in European markets.'
However, the decision raises the question of the future of the GISC. The organisation remains as the setter of standards for selling general insurance products, but, as things stand, will have no role once the FSA takes over.
However, the Association of British Insurers (ABI) had argued for a continuing role for the GISC.
Mary Francis, director general, at the ABI, said: 'There remain many questions to be resolved about the regulatory regime going forward. One point however is clear: while the new arrangements are being decided, the industry must, and will, continue to work through GISC to maintain proper customer protection and to ensure that membership of GISC is acknowledged by the new regime.'
Steven Walker of PMI intermediaries Medical Insurance Services, and member of the GISC/PMI working party, also believes there is still a role for the GISC.
He said: 'There is a strong possibility the GISC could be integrated into the FSA, with the regulation delegated to the GISC. It is still supposition, although at this stage both the Treasury and the FSA are making promising sounds.'
Meanwhile, Anthony Howland Jackson, chairman of the GISC, said: 'The board is determined that the GISC focuses its efforts on continuing the development of an effective regulatory regime to provide consumer protection in the interim period, which we understand will be a minimum of two years.' However, the GISC has agreed to drop its application to the OFT, which sought to make Rule F42 compulsory ' the rule stated that member firms could only deal with other member firms.
