BIBA disappointed by RICS report on fees
Eric Galbraith, BIBA chief executive, said: “Having read the final report, I confess to being disappointed with the recommendations in respect of commission disclosure on insurance and am surprised by the prominence this subject is given.”
Galbraith added: “The RICS has elected to take on the role of the FSA Designated Professional Body status for its members and is now trying to impose these conditions on the rest of the market. Whilst a number of our members, as part of their own business practices, already disclose remuneration automatically on all business, there is no need to make this mandatory and even less in the retail consumer market.”
Galbraith continued: “An enormous amount of time and effort has been expended on the subject of transparency, disclosure and conflicts of interest over the last four years. BIBA led the market in developing the FSA-endorsed Industry Guidance in respect of commercial customers and I believe there is no sensible case for mandating disclosure in the retail consumer market.”
Steve White, BIBA’s head of compliance & training, commented: “Looking at the four recommendations in the report, our views are as follows: firstly, the consumer market for general insurance products is very competitive with brokers, aggregators and direct writers all vying for business and we can see no value in giving consumers another piece of information that they are unlikely either to fully understand or to be able to put into context.
“Secondly, RICS should have been aware of the disclosure requirements required of firms taking advantage of the Designated Professional Body exemption. Those requirements are deliberately and specifically applied and there is not a proportionate case for the FSA applying this across the piece.
“Thirdly, BIBA has undertaken research with small SMEs which showed that only 2% of SMEs believe the amount of commission to be a very important factor in the buying process (compared to the 84% who thought policy cover, 67% total cost and 53% significant terms and conditions). There would seem therefore to be little benefit in mandating disclosure.
“And lastly, we agree that the FSA should review the suite of disclosures given to retail consumers to ensure the information is relevant to their buying decision. However, our research suggests consumers have little appetite for information regarding commissions.”