BIBA leads call to remove larger SMEs from scope of consumer rules
Brokers have told the UK regulator that larger commercial customers should be excluded from the scope of the Consumer Duty, which set higher standards for insurers in serving both retail customers and commercial buyers, apart from those defined as large risk.
In response to a consultation held by the Financial Conduct Authority (FCA) seeking views on its regulation of commercial insurance and areas for potential change, the British Insurance Brokers Association (BIBA) said removing larger SMEs from the scope of the rules would reduce the regulatory burden on its members.
“Many [larger SMEs] are experienced buyers of insurance, with some potentially having a professional risk manager,” BIBA told the FCA, suggesting that such firms are more mature buyers and so don’t need protection under the Consumer Duty.
Graeme Trudgill, chief executive of BIBA, welcomed the FCA’s decision to consult on whether the rules are appropriate for commercial buyers. “This is an opportunity to achieve change and help improve the burden of regulation on members. We are in a position where we think option three would be most beneficial, ensuring that the protection is in place for those who need it.”
The FCA said the review of its rules was driven by its objective to ensure consumers are protected and its newest requirement to facilitate international competitiveness and growth in the UK economy.
The regulator said the different levels of protection needed for small commercial insurance buyers compared to large corporations “present a challenge to us in ensuring that customers in the commercial insurance market are protected appropriately, while also not placing unnecessary regulatory costs on firms or impacting innovation”.
