Huntswood’s poll of insurers reveals that nearly a third (31%) of insurers are most anxious about the issue of suitability of advice, while just over a fifth (22%) stated that training and competence caused them most discomfort.
In the run up to GI-Day, Huntswood research confirmed that brokers’ compliance costs had doubled to cope with regulation, while insurers’ costs had risen by 25%.
But Huntswood’s latest survey reveals that it is not just the cost of compliance that is a burden to authorised firms, it is the actual implementation of the FSA’s regulatory objectives.
Andrew Wheeler, senior consultant at Huntswood commented: “It is right that insurers are most concerned about sales and suitability. The life and pensions industry has suffered extensive reputation and financial losses due to past mis-selling scandals. The GI industry, whether conducting advised or non-advised sales, has to travel along a steep learning curve in order to minimise similar regulatory censure.”
One in four individuals surveyed stated they were dissatisfied with the risk management measures implemented so far by their firm. Whilst 95% of firms polled say they have a written risk management plan in place – a key FSA requirement - only 56% believed they were on target to achieve the activity defined in the plan.
Wheeler concluded: “Firms and Approved Persons now need to strengthen their risk management frameworks, and consider what steps need to be taken to manage and control their regulatory footprint as cost-efficiently as possible. This may well require careful consideration, and outside advice, before taking remedial action.”
