HL Deb 19 May 1993 vol 545 cc1739-41

2.45 p.m.

Viscount Chelmsford asked Her Majesty's Government:

Whether, in view of the EC recommendation on insurance intermediaries, they will now require all non-life intermediaries to be registered and subject to the Insurance Brokers Registration Act 1977.

Viscount St. Davids

My Lords, Her Majesty's Government are considering carefully all the responses to our consultative document on the European Commission Recommendation on Insurance Intermediaries. My honourable friend the Parliamentary Under-Secretary of State for Corporate Affairs will wish to meet some of the main interests, including the Insurance Brokers Registration Council, to discuss further the issues raised by the recommendation. We remain to be persuaded that the extension of statutory regulation to all non-life intermediaries is required.

Viscount Chelmsford

My Lords, I thank the Minister for that not unexpected Answer. However, will he ensure that in their continuing deliberations the Government take full account of the somewhat curious fact that currently an intermediary, acting as an independent and as an agent for a buyer of an insurance policy, finds himself conforming to a code of conduct which has been set up by representatives of the sellers of that policy? Is that not curious? Would it not be better for the intermediary to be regulated rather than supervised, and be regulated by a body unconnected with either the buying or the selling of the insurance policy?

Viscount St. Davids

My Lords, the Association of British Insurers, which represents the insurers themselves, covers about 88 per cent. of the non-life policies sold. The Government are well aware of their responsibility for consumer protection, but are also aware that over-regulation would not be in the long-term interests of the insurance industry.

Lord Clinton-Davis

My Lords, is the Minister aware that the Consumers' Association has carried out very strict monitoring of what has been going on and that it has come to the conclusion that the job of supervision is not being undertaken properly in an area which is of very great moment to consumers—indeed, it could be one of the most important transactions in an individual's life? Consequently, does the Minister agree that it is vitally important that this sector requires very much tighter regulation than is currently the position? Is there not a great deal of room for improvement in the performance of supervision by the ABI and by the Insurance Brokers Registration Council?

Viscount St. Davids

My Lords, there is always room for improvement, but I should point out to your Lordships that in 1991, the last year for which we have the complete records analysed, 50 million non-life policies were sold. That occasioned 700 complaints to the ABI and something under 2,000 to the Insurance Ombudsman. We are, of course, aware of the study that has been carried out by the Consumers' Association as part of its response to our consultative document on the recommendation. The results of what is, admittedly, a small sample show that there is room for improvement. We know that the ABI and the IBRC have a copy of the Consumers' Association's response to our document. We are sure that they are taking it seriously. We shall consider carefully what the CA has said.

Lord McIntosh of Haringey

My Lords, the Minister was asked an unambiguous Question by his noble friend Lord Chelmsford. He was asked how it could be right that intermediaries, who are supposed to act between sellers and buyers of insurance policies, could be controlled by a code of conduct devised by the sellers, and how they could maintain their independence under those circumstances. Would the Minister care to answer that Question, because he did not answer it in his first Answer?

Viscount St. Davids

My Lords, a considerable number of intermediaries are covered by a regulatory body. We are discussing only those who are not members of the IBRC.

Lord Clark of Kempston

My Lords, does my noble friend agree that one of the unfairnesses in the insurance industry is that insurance companies on the Continent will not allow British interests to purchase them whereas our partners in the European Community can buy insurance companies here? Surely it would be better if we could achieve some continuity and consistency.

Viscount St. Davids

My Lords, I am not aware of the problem my noble friend raised, but I shall look into the matter.

Viscount Chelmsford

My Lords, I thank my noble friend the Minister for his various responses. Perhaps I may follow up with one other point. Will he be so kind as to ensure that the Government take into account what has been a running sore for many years so far as concerns the insurance broking industry? It is that every time one of its members is found wanting by the registration council and is banned from being a broker, that person may, by dropping the term "broker" from his name, continue trading under the title of "intermediary". That does not seem to help to improve standards, so will he ask the Government to take account of that matter?

Viscount St. Davids

My Lords, there are a number of reasons why one cannot be a member of the IBRC. For example, if one becomes a tied broker in the sale of life assurance policies, one is prohibited from becoming a member. One can lose one's registration merely through forgetting to pay the fees due. I shall ensure that my honourable friend looks further into the matter.