Biba CEO White: FCA needs to act on broker regulatory burden

In his opening address at the British Insurance Brokers’ annual conference, Steve White, CEO of the trade body, said research by London Economics showed how red tape costs, both direct and indirect, have increased exponentially for brokers over the last three years.

Speaking to a packed auditorium at Manchester Central, White said this was hitting investment in and growth by the industry, as well as being “significantly more” than the fees paid by brokers operating in “most other jurisdictions”.

The FCA and government must look again at how regulatory costs can be reduced. It is the right thing to do given the cost-of-living increases hitting our members and our customers.

Steve White

White said: “The FCA and government must look again at how the current regulatory costs can be reduced. It is the right thing to do given the cost-of-living increases hitting our members and our customers.”

His views were echoed by Jonathan Evans, chair of Biba, who said the industry shouldn’t have to wait until the end of the year for a regulatory fees overhaul.

Evans said: “The FCA accepts that the polluters should pay, so they need to get a move on and press ahead much sooner.”

Cost-of-living

During his speech, White was applauded when he questioned the government’s logic on insurance taxation during the cost-of-living crisis.

While we all accept that the Treasury needs revenue given what has happened in recent years, 12% is too high.

Steve White

He said: “[Former US President] Ronald Reagan was right when he said: ‘inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.’ You have been clear that more needs to be done to protect your customers and your businesses.

“We have moved early to produce guidance to members on how customers can contain insurance costs while maintaining adequate cover.

“But I do question why, in the middle of a cost-of-living crisis, the government thinks it is acceptable to hit insurance buyers with a 12% insurance premium tax? While we all accept that the Treasury needs revenue given what has happened in recent years, 12% is too high.

“At the very least, it should be frozen and not raised for the remainder of this parliament. We also call for an insurance premium tax exemption to apply to property insurance premiums for impaired high-rise multi-occupancy buildings that await, or are undergoing, remediation.”

Multiple-occupancy buildings

White added that Biba felt the work brokers are required to do to comply with the fair value assessments mandated by the regulator was simply disproportionate to any value gained by customers.

He said Biba would call on the FCA to look again at the scope and the process behind these assessments, while continuing to work with the Association of British Insurers to help implement the planned reinsurance facility for the most difficult cladded risks.

His comments came after, in a letter to FCA CEO Nikhil Rathi, Michael Gove, Secretary of State for Levelling Up, Housing and Communities, said he was “outraged” by the findings of the FCA report into broker remuneration.

In April, the FCA published its report into 16 brokers, which found the absolute levels of remuneration, including commissions, rose by nearly 40%, despite reductions in commission percentages, with average broker remuneration per policy rising from £2,170 in 2019 to £3,010 in 2022.