IFSRA's move, the smaller firms hope, signals an end to the big companies 'unfair' advantge. Laura Slattery reports
A year after the Central Bank was dubbed a "Rambo regulator" for "flexing its regulatory muscles on the smaller insurance broker firms and letting the larger institutions away with less regulation", the new single financial regulator has announced that it will extend consumer protection standards to all financial services firms.
The Irish Financial Services Regulatory Authority (IFSRA), which took over the Central Bank's regulatory role in May, will introduce new codes of conduct for insurance companies and banks within the next month.
It is a move that has been welcomed by bodies representing brokers, which hope it will signal the end of insurance companies' and bancassurers' "unfair" advantage over smaller intermediaries.
One sore point for the Professional Insurance Brokers Association is that bancassurers can use cold-calling tactics to secure insurance and investment business from its current account customers.
At the moment, insurance and investment intermediaries must comply with a comprehensive code of conduct that includes restrictive rules on cold-calling, but the same regulations do not apply to the tied agents or direct sales forces of insurance companies and banks.
"Direct sales forces and tied agents have had no codes up to now. They could continue to cold call," said Mr Diarmuid Kelly, the chief executive of the Professional Insurance Brokers Association (PIBA), who made the "Rambo regulator" accusation last year.
"The codes in place for the banks allow them to cold call whenever they make a banking sale, so if you went to withdraw money from an ATM, their insurance company could call and try and sell you a pension," Mr Kelly said.
"We feel the matter should be addressed as a matter of urgency," Mr Kelly said. "Fair enough, if you buy an insurance product and they call you about other insurance services."
The new statutory codes of practice have not been written yet, but will be designed to ensure that consumers can expect to be treated fairly and with honesty, that the provider is acting in their best interests and that the products sold are suitable ones.
"There has been an uneven playing field to a degree between insurance companies and brokers," a spokesman for IFSRA said. "The brokers had to use specific rules of engagement." Others did not.
The codes will be issued on an interim basis and will be followed by a review of all existing rules and regulations for financial services firms. Consumers are encouraged to offer their views.
The subject of cold calling will be "on the table", the spokesman said. This does not necessarily mean bancassurers' ability to cold call will be curtailed, however, as IFSRA claims it is "hearing different views" on the topic.
"One view quite clearly is that cold calling of any kind is not acceptable because it impinges on the consumer at home and isn't a particularly friendly way of conducting business.
"The other view is that cold calling is a positive thing that gives consumers information on competitive options that they wouldn't normally come across," the spokesman said, adding that both of these consumer views and the industry view would have to be taken seriously.
In the meantime, IFSRA's consumer director, Ms Mary O'Dea, will issue a Consumer Charter - a stripped-down version of the new codes - before the end of the year.
"The codes that are there for intermediaries at the moment are entirely consumer-focused, but they are written in a way that they are aimed at the industry. That is their target audience," the IFSRA spokesman said.
This has led to "a knowledge gap", he added. "Consumers don't fully understand that these things are in place and that these are their rights, backed up in legislation."
