Consultant Grant Thornton says a survey of 160 general insurance brokers, including 29 of the top 50 income earners, has found most are ignorant of the corporate and personal risks that regulation under the FSA will bring.
Underlining this view is the finding that 72% of respondents "failed to recognise key regulatory terminology", whilst four in ten of the top 50 brokers "had not budgeted how much preparations would cost".
That is not to say respondents held much faith in the existing voluntary system overseen by the General Insurance Standards Council, as just 16% of those surveyed said the current regime was effective.
Some 43% of firms said they probably did not comply with GISC requirements in any case.
The risk to firms and individuals is they ignore the warning signs, and only learn too late of the FSA’s propensity to actively fine and review the way business work as part of its responsibilities as a regulator, GT says.
Almost all, or 96% of those surveyed said they were confident of meeting the 14 July, 2004 deadline for submitting their application for authorisation.
But, likewise many said they were having trouble preparing their applications and implementing changes necessary to meet new regulatory responsibilities – such as changing procedures or training staff.
Some 50% of firms said they would bring in outside consultancy expertise to help with such issues, but GT warns the market supply of such expertise may not be enough if there is a late rush to meet the new rules.
In related news it has been suggested that the Financial Ombudsman Service may implement retrospection in reviewing cases of alleged mis-selling of insurance products.IFAonline
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