With referral fees out the window, brokers must have breathed a collective sigh of relief on learning that the FSA has decided to take a relaxed view on one of their few remaining mildly dubious income streams.
A “thematic” review carried out by the obsolescent regulator has found that some brokers derive “up to 5% of top line revenue and significantly more of bottom line profits” from flogging policyholders instalment payment plans (so-called premium finance) with interest rates of up to 20% APR and may occasionally neglect to mention cheaper finance options available direct from insurers or elsewhere.
But on the basis that “it is very important that there is a vibrant, sustainable broker market out there” the FSA has decided to turn a blind eye – so long as brokers are “transparent” (presumably not in the ghost-broker sense) and bear in mind that they are supposed to be looking after clients’ best interests.
Perhaps the whole ‘brokers need to make a living somehow’ argument could have been borne in mind during the referral fees debate. Bit late for that though. Great to see the return of pragmatism all the same!