Tiner explained the FSA’s view that mandatory commission disclosure would not remove the need for firms to manage conflicts of interest arising from their business.
“Full disclosure would not be a panacea, nor provide a safe harbour from the need to manage conflicts – they would still be present and they would still have to be managed.
“The management of conflicts is not the responsibility of the regulator. Our responsibility is to set the principles… and assess compliance with those principles.
“We are doing that right now through our work on conflicts management and if we find serious breaches or ignorance of our requirements we will take the appropriate action against the firms and individuals involved.
“Management responsibility lies with the people in the firms. It lies in the culture of the firms, in the operations of the firms and in the business models of the firms.”
He also emphasised that the FSA would support industry efforts to develop market-based solutions to perceived problems. This is consistent with the FSA’s general approach to regulating wholesale markets.
“The wholesale insurance market is a professional market, a market where we will only intervene where it is appropriate to do so, and a market in which we are prepared to rely on market solutions where there is a real chance that they will work,” Tiner added.
“The door is not closed on regulatory intervention but in a world where there are calls for less regulation generally, calls for less gold-plating of directives and calls for less prescription overall, immediate regulatory intervention without clear evidence of market failure would be incompatible with [our] approach and philosophy.”
