The London & International Insurance Brokers’ Association (LIIBA) was created with one key purpose in mind – to serve the interests of Lloyd’s insurance and reinsurance brokers operating in the London and international markets.
It is with an eye ever fixed on this purpose that the association draws up an annual manifesto of sorts to identify its key areas of focus for the year ahead. Discussing LIIBA’s ambitions for 2022, chief executive Christopher Croft noted his belief this will be the year that the organisation makes a very significant difference in the way the industry is regulated.
His hope is that the regulatory burden facing LIIBA’s members will be eased this year, as a reflection of the market they serve, and he called for the Financial Conduct Authority (FCA) to deliver a more proportionate regulatory regime. It’s not that the FCA has been heavy-handed, he said, but rather that they have displayed a lack of precision and discipline.
“The point of regulators in imperfectly competitive capitalist markets is that your fundamental philosophy is that markets work as a way of distributing scarce resources,” he said. “You should only intervene in the markets where there’s obvious evidence that the market isn’t working for some reason, and you as a regulator can do something to fix it. And I don’t think they’re disciplined enough about that.”
LIIBA is looking to encourage the FCA to be precise about what it is trying to achieve and to limit the scope of its directives accordingly, to ensure burdens are not being laden on brokers where they are not merited. In its recent manifesto, it identified the role that changing the culture at the FCA plays in accomplishing the association’s objectives for 2022.
“[Former FCA CEO] Andrew Bailey who’s now governor of the Bank of England used to [say] ‘we’re not interested in the stability of the graveyard’,” Croft said. “But sometimes in their activity, you wonder whether that’s true, [whether] actually, the FCA could meet a lot of its objectives if there was no activity at all in any of the markets it regulated…
“Good regulation builds markets, so part of their role ought to be about making sure that those markets are successful because, in the end, their overarching objective is to deliver successful outcomes for clients. And that does actually need successfully functioning markets [in order] to occur. So, it’s having that mindset rather than necessarily, ‘there’s something going on, how do we put us put a stop to it?’, which you can sometimes feel is their first thought.”
