Double standards

The light-touch regulation of motor insurance, as has been pointed out here in Financial Adviser, has been an ongoing scandal for years.

And, when compared with the over-regulation of financial advisers, it gives credence to the often repeated claim that the City regulator and the general insurers have no respect for the IFA community.

But, when compared with most general insurance brokers and the lack of transparency and corporate discipline in motor insurance, IFAs are like angels.

The consensus is that the so-called claims culture and the vultures who feed off this criminality – from claims companies to the general public who see an opportunity to make a quick buck – are behind the ever-rising premiums decent motorists have to pay every year.

But that is a convenient excuse. It is the culture of the industry that is in need of reform: providers taking money off motorists knowing full well that there will be question marks if they come to claim; providers cancelling policies without notifying the insured, leaving them to drive on the streets uninsured; traffic police who are aware of the one or two companies who are the main culprits but who refuse to blow the whistle.

This is the root of the problem, the lack of transparency, a regulator that often avoids taking responsibility and even the courts, who see offenders as the culprits, rather than misleading providers.

All this can be remedied in simple ways. The same way that a financial adviser has to produce evidence of having advised a client, then those motor insurers who do business by telephone through call centres should be compelled to produce the tapes as evidence of the conversation - and it should form part of the contract between the two parties.

That is not too much to ask.

The conscious objectors

Financial advisers and firms are reacting positively to the joint Fiscal Engineers/Financial quality of trust campaign.

A number of leading organisations and politicians have also registered their support for the campaign and others have privately indicated their backing.

However, missing are a number of prominent organisations and individuals who normally are very vocal about consumer rights but find it difficult giving their backing to the campaign, because of the association with a rival body.

They have somehow mistaken taking an ethical stand with taking a political position on a matter that is of minor significance when compared with the wider issue of the popular reputation of the sector.

However, it is a campaign that is on a roll and one that should gain the backing of all those who care about how the industry is seen by the general public as we go forward.