HM Treasury News Release

120/98                                            27 July 1998
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           REGULATION OF INSURANCE BROKERS AND OTHER
                         INTERMEDIARIES
                                
                                
Measures to secure better standards of practice in the sale of general insurance,
such as car and house insurance, and maintain good service for customers were
announced today by the Economic Secretary, Helen Liddell.

The announcement follows the completion of a Treasury consultation with
organisations representing industry and customers over regulatory requirements in
the non-life insurance intermediary sector.  

Under the arrangements announced by Mrs Liddell:

     life insurance constituting an investment (e.g. personal pensions)will be
     regulated under the single comprehensive regime of the Financial Services
     Authority (FSA).  The Treasury will retain the power to extend FSA's
     regulatory responsibilities to other types of insurance if this appears
     necessary to protect consumers; and

     to maintain and improve professional standards in the transaction of non-life
     insurance business (such as car and house insurance) by brokers and other
     intermediaries, the Treasury will look to voluntary self-discipline rather than
     statute.   Restriction on the use of the title 'insurance broker', under the
     Insurance Brokers (Registration) Act 1977, will cease in due course, through
     repeal of the Act.

Mrs Liddell said:

     "I want insurance customers to get good services. Collaboration between the
     various interest groups offers the best way forward in a changing and
     dynamic market.  Our consultation has reaffirmed my view that a case for
     continuing statutory regulation through the registration of insurance brokers
     has not been made.  Useful though it has been in the past, it no longer fully
     meets the needs of today's market.
     
      "This does not mean we expect an absence of standards, a free-for-all.  Most
     of those we consulted argued for some form of regulation.  But a majority felt
     that the best way forward was offered by self-regulation by a body having
     support across the insurance industry, independent of insurers and
     intermediaries but taking their interests and those of their customers into
     account.

     "I shall be asking my officials to encourage and monitor the development of
     this wish for self-regulation."

The Insurance Brokers Registration Council (IBRC), established by the 1977 Act, will
cease to exist in its present form when the repeal comes into effect.  Until then, the
Government hopes that it will continue to provide valuable, if limited, support for
maintaining standards, and to act as a professional focus for those now practising as
insurance brokers. 

The repeal of the 1977 Act will be one of a number of measures in the Government's
proposed legislation to reform the financial services regulatory structure, making it 
more effective and straightforward.


NOTES TO EDITORS

1.   The Minister made the announcement in response to a parliamentary
     question from Ivor Caplin [Hove]. The full text is attached.

2.   The Treasury's consultation on insurance intermediary regulation and the
     future of the IBRC was announced on 7 April.

3.   If you have access to the Internet, you can find this news release and other
     Treasury material at http://www.hm-treasury.gov.uk.




# = pounds sterling