FEIFA Chief Executive / FECIF Secretary General
The importance of effective representation
The compromise text for the Insurance Distribution Directive (IDD) was recently finalised and it was very pleasing to see that the vast majority of the proposals put forward by FECIF in the recent consultation period have been heeded.
This is surely a very good example of the need for strong and effective representation for the adviser and intermediary community, to ensure that any new regulations are appropriate, proportionate and workable, whilst still achieving a sensible and necessary level of consumer protection.
The IDD is effectively IMD2 and is of significant relevance to our members. Some of the key proposals or confirmations put forward by FECIF are detailed below – these have all been incorporated within the agreed text.
The essential need for a level playing field, both across all distribution channels and also with regards to all insurance-based investment products, thus bringing these under the scope of the IDD rather than MiFID.
EIOPA should establish, publish and keep up-to-date a single electronic database of intermediaries providing cross border services, whether under Freedom of Services or Establishment.
All insurance distribution sources should provide information to customers about the nature of the remuneration their employees or representatives receive for the sale of insurance products – in order to avoid the distortion of competition by otherwise encouraging direct selling, at the expense of consumer choice and protection.
This Directive should not be too burdensome for SMEs – achieved in part by the proper application of the proportionality principle.
Article 16 of the Directive details the information that needs to be disclosed to customers in good time before the conclusion of the contract or sale. These criteria are very much in line with those proposed by FECIF.
The choice of the method of remuneration should be left to the consumer, with all necessary information and knowedge at their disposal.
The disclosure of all costs via the issuance of the KIID to consumers at an appropriate and timely point in the sales process.
A great deal of earlier versions of the IDD had contained text that would have been unfair and anti-competitive, not least to the adviser and intermediary sectors. At least partly due to the active participation and advocacy of assoctaions like FECIF the finalised text is more equitable, relevant and practical – with consumer protection enhanced in my opinion.
We should be proud of the work that we haved undertaken in this regard, and the significant success that we have achived.
In a recent article in a financial industry publication I stressed the need for coordinated action by our sector, and thus the importance of active and effective representation. This can only happen if such representation is strongly supported by the advisory and intermediary sector. I hope that all of those involved in the sector make sure that they help us to continue helping them. The above is a very good example of why it is in the interests of us all.