The British Insurance Brokers’ Association (BIBA) has urged the Financial Conduct Authority (FCA) to prioritise effective supervision amid rising regulatory costs for small brokers.
The trade body said regulation costs has soared by 70% and that compliance expenses for small general insurance brokers have increased from 4% to 6.8% of income, based on new research by London Economics.
According to BIBA, one in seven employees in small brokerages actually work exclusively on regulation matters. The association said the indirect cost of regulation for brokers is 10 times the direct cost.
In his address at the House of Parliament earlier this week, BIBA chief executive Steve White said the increase in regulatory cost for small brokers “is a burden on business that must be tackled”.
“The FCA recently outlined its mission, stating that it should be a proportionate and effective regulator,” said David Sparkes, BIBA’s head of compliance and training.
“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,” he added.
Craig Tracey, MP for North Warwickshire and Bedworth who once owned a broking business, backed BIBA and called for “more proportionate, fair and cost effective regulation.”
“A major factor in my decision to leave insurance broking was the unreasonable burden of disproportionate regulation on my small but successful business,” said Tracey, who is also the co-chair of the All Party Parliamentary Group on insurance and financial services.
While working with Tracey’s group, BIBA is also in dialogue with the FCA. The industry body will likewise raise the issue with relevant members of parliament.
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