To: David Salter@DFINANCE
Subject: legislation re IFSRA
To David Salter
The regulations as currently applied create an anti competitive disadvantage for the insurance Broker.
The insurance Broker is discriminated against and is subject to draconian and possibly illegal restrictions .It can be easily established that as the smallest and weakest seller of insurance products the Broker is the only sales outlet to be restricted or regulated by the Central Bank.Under the Investment Intermediaries Act the Regulator only regulates the Broker.The direct sales staff of banks and insurance companies are free of any of the restrictions imposed on the Broker?.
As regulatory authority is primarily a protector of the consumer should the regulator not exert equal authority on all sellers of financial products in Ireland?
Why should a bank customer not be protected by the same authority which protects the broker customer.?
Banks invariably sell a limited range of financial services and are normally tied agents to one insurance company.This is hardly to the advantage of the consumer.
ref Consumer Credit Act 1995
Re section 116 (b)
there is a requirement that a Mortgage Broker must have agencies with banks.
This undermines the authority of the regulator (who authorises the Broker )
Eg the bank can for any number of unprofessional ,personality conflict,commercial, competitive reasons cancel a brokers agency without giving a reason.
The regulator on the other hand has to give a reason and the broker has recourse to the High Court.The banks are unaccountable under this legal framework.
Banks impose unfair and unethical agency agreements on mortgage brokers.
The agency agreement is referred to s "an industry standard contract "
There is one problem with this the broker had no input into the drawing up of such contracts.
This is a monopoly type contract imposed on the hapless broker as a condition of his existence.
There is no logical reason why an agency is required.
Agencies can be replaced by equal party contracts.Both parties should be responsible to the regulator .
Each application to a lender on behalf of a consumer can form a contract.If the banks wishes to accept a contract exists if the bank declines etc.
some advantages of Contracts v Agencies:
The client/consumer is better represented by the independence of the broker(who can among other services make a complaint to the bank without fear of being wiped out and losing his buisness.)
The regulatory authority retains the power to authorise the broker.
Undermining of the regulator ceases.
If either side of a contract have a complaint then the regulator decides(not the bank)
The bank would lose the total and inappropriate power over the broker.The bank would be accountable for its actions in relation to consumer rights .
Banks are licenced to accept buisness from the consumer.
Banks are not licenced to discriminate against any consumer who choses the market option of independent broker advice .
Regulation in favour of the consumer is the current rhetoric.
Policy to date has not been reflected in even handed legislation .
All sellers of insurance products or mortgage products should be subject to the same regulations.No exceptions can be justified.
The OECD report on regulatory reform in Ireland made this very point----that the Irish regulatory authorities have only the producers interests incorporated in law and the consumer is seriously disadvantaged.
Eg the Central Bank regulation of only one small group of sales persons
and the Central Bank as regulator has no redress mechanism for the few sales persons which it does control.