The Royal Institute of Chartered Surveyors has told the Financial Services Authority to get its "tanks off their lawn" and is voicing its objection to FSA regulation of the insurance market surrounding property management.
Complaints now tabled by RICS are placed just nine months ahead of the introduction of general insurance regulation by the FSA, which must be enacted on January 14th 2005 - when the EU Insurance Mediation Directive comes into force – but suggest RICS is "vehemently opposed" to the regulation of its members’ activities in relation to specialist insurance business.
Although it is presented late in the day of the general insurance regulations consultation, a letter sent by RICS to chancellor Gordon Brown at the end of March suggests GI rules which are also imposed on chartered surveyors will be "bad for business, expensive, anti-competitive and counter productive" because of the increased costs associated with regulation.
"The proposals to impose FSA regulations across the entire insurance market is a knee-jerk reaction demanding a "one size fits all" solution in areas of the market where regulation is inappropriate or simply not needed,” says a spokesman for RICS.
RICS' problem, it seems, is the trade body is not considered to be a Treasury approved designated professional body, which would give its members "grandfathered" authorization into regulation where they conduct insurance business as a secondary business.
"Placing a requirement on tens of thousands of firms to register under the FSA scheme simply because insurance is an incidental part of their business seems to us wholly unnecessary and, as knowledge of this requirement spreads, will be the cause of widespread anger," argues Brooke.
Part of RICS’ argument is the UK government intends to impose IMD rules on the property market when other countries have chosen not to do so, says the letter by Brooke.
"We simply do not understand why the UK Government has decided to go far beyond what was strictly necessary and apply this directive in ways that other countries do not appear to feel necessary. The net result is likely to be a withdrawal of smaller firms from areas like property management, something which is presumably not the Government's objective," says Brooke.
RICS points out its small firm members carry out commercial and residential property management as part of their work which can on occasions include the placing of insurance.
As a result of the changes which were not originally thought to cover the property management sector, RICS members will have to seek some form of direct FSA authorisation or network membership in order to conduct insurance business – highly unlikely given there are few networks handling construction insurance.
As a result of the changes and additional costs, surveyors will either be forced to back out of this specialist advice market or will have to place the additional costs on cliehnts, argues RICS.IFAonline
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