UK - Employee benefit experts are welcoming regulatory changes for the group risk industry which will "raise the bar of best practice".
The changes will take effect from January 14 next year when the Financial Services Authority’s remit is widened to include all insurance-related business.
The move is driven by the Treasury’s push to implement the European Union’s insurance mediation directive which sets common minimum standards for the regulation of sales and administration.
The FSA will take over regulation from Group Risk Development (GRiD) which represents providers, reinsurers and independent financial advisers.GRiD says standards across the industry will undoubtedly benefit from formal regulations.
GRiD chairman Jane Dale – group risk director at Legal & General – said:
“We will be regulated by the FSA as an industry from January 2005. So one of the objectives for GRiD is to make sure everyone understands what that means and to identify areas that are still unclear.”
Under the general insurance regulations, clients will be classified as commercial customers. Dale said the principal focus will then be to ensure policy documents are issued on time and the procedure for processing claims is fair and efficient.
Dale added: “At this stage we think we are on track to comply with the regulations but we do have one or two questions. For example, whether flexible and voluntary benefits will be classified as commercial or retail customers.”
Scottish Equitable employee benefits technical manager Sue Sneddon – who also sits on the GRiD committee – said the association was working through final FSA rules.
She said: “We are putting together a number of case studies that identify our interpretation of what has to be done for each of the key areas in group risk.
“And the FSA has agreed to look over them to make sure we are all heading in the right direction.”
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