The FSA is taking advantage of the problems in the professional indemnity insurance market to push IFAs down the path towards further consolidation, says Scottish Widows chief executive Archie Kane.
Speaking to Money Marketing in his first interview since moving from parent company Lloyds TSB last October, Kane says he generally believes the regulator is doing a decent job but it is using PI to achieve its desired goal of having to deal with fewer IFAs.
The comments mark the first time that a senior life office executive has publicly stated what many IFAs have long feared.
In a wide-ranging interview, Kane says Widows is keen to work with IFAs to “share the pain so we can share the gain” but he rules out any specific involvement in Widows paying IFAs' PI bills, saying the company is not in the commercial insurance business.
He says Widows will be concentrating its time and resources on the “key relationships” within the IFA sector, but would always continue to serve all segments.
Kane rules out a significant place for with-profits in Widows' future plans, saying it no longer serves the industry or consumers well although he does not doubt others will continue to sell with-profits.
He predicts that rival insurer Standard Life will have a “distracting time” as it moves towards demutualisation although it will still figure in the top five or six players in five years time.
Kane says: “The regulator is pushing IFAs towards consolidation through the regulatory burden on the sector and through things such as PI where the premiums have increased quite dramatically.I think we will see quite significant rationalisation in the IFA sector.”
FSA spokeswoman Louise Buckley says: “We are focused on making ourselves easier to do business with and are constantly mindful of the need to keep our regulation proportionate and appropriate. We have no particular view on how the market is structured or which business model firms follow.”