The Financial Conduct Authority may grant insurance providers their “darkest, most secret wish: the ending of all-scale independent distribution by a total commission ban”, Tom Baigrie has warned.
Speaking at the Lifesearch awards last week, the co-owner of the London-based protection intermediary made the stark comment in the light of increasing regulation coming from Europe and suggestions that the incoming FCA might take a far tougher line on the industry than the current FSA.
He also said: “The effort and cost of all the regulatory changes in 2012 has paralysed all new product development and focused all of us on survival, not strategy. There is more to come.
“The FCA threatens to make the FSA look positively laissez-faire when it comes to telling us how to run our businesses.
“Of course, I am talking ‘conspiracy theory nonsense’ but imagine a world where only those who could profit directly from premiums – the providers – could distribute the policies.”
Mr Baigrie, who set up Lifesearch 15 years ago, added that the industry should hope the regulator gets it right by focusing not on the way that intermediaries are paid, but the culture in which they work.
However, Mr Baigrie also praised the way providers had handled the challenges of the so-called G-Day and the changes to pricing based on the European Union’s implementation of the Gender Directive.
He said: “It made our lives a near-impossible jigsaw, but in the end we intermediaries had a choice and providers handled it near-faultlessly. Their pricing seems to be like a market should be: different strokes for different folks.
“What providers must focus on now is trying to retain their customers a bit better – and respecting our relationship and reputation by telling us when our customers call them about something, rather than stealing them off us.”
Provider response:
Duncan Finch, managing director for Legal & General’s retail protection business, said: “Our priority is to help people when they are at their most vulnerable and to pay as many claims as we can, as soon as we can.
“Customers who are having to cope with a critical illness want the peace of mind that their claim is paid so they can concentrate on their health and possible recovery.”
