The FSA needs to ensure that it applies the same rules equ-ally to general insurance companies and life and pension firms, says Norwest Consultants principal Harry Katz.
He told the round table last week that the regulator appears to apply different rules to general insurance compared with life and pension providers when it comes to the controls on the selection process of which adviser firms they choose to deal with.
He said if general insurance providers think brokers are acting dishonourably, they can immediately cut them off but for life and pension companies, the FSA makes cancelling agencies a more tortuous process. Katz said: “A GI provider can cut you dead. The other point is that on the one hand we have regulations that say we should not offer advice on a price-led basis but on the other hand we get a regulatory beating about financial exclusion. You cannot have it both ways. It needs to be defined – when is it churning and when is it change for the benefit of the client?”
Tenet chief executive Simon Hudson said providers should be able to be more selective about the advisers they choose to do business with but control is out of their hands.
Hudson said: “Providers are not able to make the commercial decision to say to advisers that are churning, ‘I am not going to deal with you any more’, therefore sustaining the bottom end of the market. My understanding is that providers cannot turn an agency down because the regulator will not allow it.”