The British Insurance Brokers’ Association (BIBA) has called for the Financial Conduct Authority (FCA) to prioritise “cost-effective supervision” following news of a 70% increase in regulation costs for small brokers.
New research conducted by London Economics has shown that the cost of compliance for small general insurance brokers has increased from 4% to 6.8% of income in the last three years. The statistics, launched in BIBA’s 2017 Manifesto at the Houses of Parliament have also shown that as many as one in seven employees in small brokerages effectively work exclusively on regulation. BIBA has also argued that the indirect costs of regulation for brokers is ten times the direct cost.
Since the FCA replaced the Financial Services Authority (FSA) in 2013, the regulator has instigated more than 60 consultations, reviews, statements and studies introducing changes to the insurance market. BIBA says that this accumulation hinders brokers from introducing new customer benefits such as MyLicence and Flood Re and is calling for the FCA to prioritise effective supervision over and above continual change.
Steve White, BIBA’s chief executive, said in his address at the Houses of Parliament, that the increase in regulatory cost for small brokers “is a burden on business that must be tackled.”
David Sparkes, BIBA’s head of compliance and training, added: “The FCA recently outlined its mission, stating that it should be a proportionate and effective regulator. Our members have told us that this is not the case and we want the FCA to make the most of their mission consultation to address this.”
Craig Tracey MP, co-chair of the APPG and member of the BEIS Select Committee, said: “A major factor in my decision to leave insurance broking was the unreasonable burden of disproportionate regulation on my small but successful business. I support BIBA and their rightful call for more proportionate, fair and cost effective regulation.”