FCA closes wholesale insurance brokers market study with publication of final report
The Financial Conduct Authority (FCA) has published the final report of its Wholesale Insurance Brokers market study to assess how well competition is working in the sector which it launched in November 2017. The FCA said that its work had: ‘found no clear evidence in relation to the competition concerns explored. Overall we have not found evidence of significant levels of harm to competition that merit the introduction of intrusive remedies.’
The FCA had, however, identified some areas of concern which have scope for improvement including:
- firms’ management of conflicts of interest;
- the information firms disclose to clients; and
- contractual agreements between brokers and insurers which, in a small number of cases, have the potential to limit competition.
The regulator said that the issues identified could be addressed within its usual supervisory process and/or competition law enforcement process, if appropriate. The FCA would work with firms to address the concerns found in these areas, it added.
The FCA’s findings were drawn from multiple pieces of analysis including 73 brokers’ and 49 underwriters’ responses to the questionnaire looking at market features including conflicts of interest management, market shares and entry/exit. Throughout the project the FCA engaged with market participants. This included brokers, underwriters and UK and international industry bodies.
The FCA noted that: ‘Given the dynamic nature of the market, we will continue to monitor developments in broker business models and the effectiveness of competition.’ This would allow the regulator to determine at an early stage whether regulatory attention is required.
BIBA applauded the FCA’s decisive report. Steve White, BIBA’s Chief Executive, said: “The fact that the FCA closed this assessment at an unprecedented early stage is a welcome step and validates our view that the wholesale insurance market is a highly competitive place. It is also welcome that the FCA intends to deal with any follow-up matters on a business as usual supervisory-led basis.
The British Insurance Brokers' Association (BIBA) is the UK 's leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers. BIBA membership includes 1,700 regulated firms. BIBA brokers handle around half the value of all UK home, contents, motor, travel, commercial and industrial insurance policies. Insurance brokers make a direct and indirect contribution of 1% to UK GDP.
BIBA is the voice of the industry advising members, the regulators, consumer bodies and other stakeholders on key insurance issues. BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards.
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