AUSTRALIAN INSURANCE brokers feeling weighed down by the regulatory burden should spare an occasional thought for Steve White, the recently appointed Chief Executive of the British Insurance Brokers’ Association (BIBA). He’s a man who deals with the tough new regulatory regime in the UK and understands the subtleties of eurocrats. Every week he has to deal with a mass of inter-locking broker organisations, as well as regulators and politicians. He fights his battles on many fronts, dealing with a regulator that sometimes seems hell-bent on feeding brokers to the lions, while also dealing with a market experiencing dramatic change. When Eric Galbraith retired in May after a 10-year stint running BIBA, Mr White had been working in the association for nine years, most recently as head of compliance and training. As one board member involved in his selection told Insurance News, “we couldn’t find anyone nearly as knowledgeable and switched on as Steve; he was the benchmark through the whole search process”. A plain-speaking professional who has experience on both sides of the track – he has worked at major insurers as well as the General Insurance Standards Council and the Financial Services Authority – he understands what is motivating the new UK regulators, but doesn’t always agree with them. Consider this comment on the UK’s broker regulator, the Financial Conduct Authority (FCA): “They have an appetite and enthusiasm for supervision that’s pretty well unheard of around the rest of Europe.” He has a point. The FCA started operation on April 1, a
month before Mr White stepped into the top job at BIBA. The FCA is one of two new agencies replacing the Financial Services Authority. The other is the Prudential Regulation Authority. The new “twin peaks” approach pioneered by Australia means the two new authorities do much the same job as Australia’s ASIC and APRA. The FCA is responsible for the supervision of all regulated financial firms and the prudential supervision of those not supervised by the PRA. The FCA has taken to its role with considerable gusto, handing out multi-million pound fines to erring financial services companies. As BIBA explains in a recent circular to its members, the authority has set out to be “more judgement-led, forwardlooking and interventionist, with a focus on firms' business models and the potential risks that their activities pose to consumers and financial stability”. Mr White would probably feel more kindly towards the new regulator – last month he awarded it a B+ or C- for its first 100 days in operation – if the cost of compliance wasn’t so expensive and sometimes off-target. “The costs are direct and indirect,” he explains. “Direct costs of course are fees and levies. There are no actual indirect regulatory costs – it’s not an exact science and you’re never actually comparing apples with apples. “So the indirect costs are the costs the regulator forces upon you to do what he wants you to do.” The tough new approach to financial services stems from the 2008 global financial crisis, which was centred around financial houses of cards manufactured by London-based investment and banking houses. The implications of their activities slipped past the then-regulator.
insuranceNEWS
August/September 2013
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