The FSA is considering proposals to introduce two different regulatory regimes as part of its review of the insurance conduct of business rules.
Money Marketing can reveal the FSA is looking at creating one regime for protection products and another for commoditised insurance products, including private medical insurance, personal accident insurance and car insurance.
The regulator is considering whether to increase the rules on products such as income protection, payment protection insurance, critical-illness cover and life insurance in a bid to reduce consumer detriment in these areas.
But the proposals could see general insurance products deregulated to meet the minimum standards which are currently in place through the insurance mediation directive.
Brokers are concerned that the two proposed regimes will not apply equally to insurers and advisers, which could put advisers at a disadvantage and create an unlevel playing field as insurers may face less of a regulatory burden.
British Insurance Brokers’ Association head of compliance and training Steve White says: “We support the Government’s original decision to apply the Icob rules to insurers as well as intermediaries. Any change of the rules will be opposed by the association.”
FSA spokesman Robin Gordon-Walker says: “The focus on commoditised insurance is around reducing prescriptive rules because there is less consumer detriment in this area.
“We are looking at the possibility of strengthening the rules on protection products as a result of our findings on PPI and other more complex insurance products. Two different Icob regimes might be the outcome but we cannot predict this yet.”
The outcome of the Icob review is due to be published next month.