Mortgage brokers will have to join the General Insurance Standards Council (GISC) if they wish to continue recommending general insurance (GI) products alongside the mortgage, if the regulator’s rule book is exempted from the Competition Act.
The GISC has confirmed it is seeking exemption from the Office of Fair Trading, following the decision in September from the Competition Commission Appeals Tribunal that its controversial Rule F42 contravenes the Competition Act. The rule states that member insurers can only transact business with member intermediaries. Given that the vast majority of insurers have already, or are in the process of signing up to the GISC, mortgage brokers who sell buildings, contents and payment protection will be forced to join if they wish to continue selling these product lines.
GISC membership will cost brokers only conducting a small amount of GI business £200 per year. Professional indemnity requirements will be satisfied by current requirements under the MCCB. Brokers who decide against joining will, however, be able to continue selling these products on a tied basis.
The GISC’s chairman, Anthony Howland Jackson, said he remained convinced a single regulator for the selling of GI products is in the best interest of customers.
‘The GISC is already the most credible and widely based regulator for the general insurance industry, operating on a voluntary basis. We have over 6,000 member businesses representing all types of distributors of insurance. We believe consumer protection is best served if regulation is in place which is based on the application of uniform standards. This decision reaffirms our determination to ensure GI customers benefit from regulation, regardless of how they arrange their insurance,’ he said.