Sunday, 16 February 2014
I would contend that insurance broking is not a profession and general insurance advice does not consitute a financial service.
Misconceptions in both respects stem, I believe, from over-exposure to the local newspaper during our formative years. I certainly remember local solicitors, accountants and brokers featuring periodically in the Folkestone & Hythe District Herald following their departure to Brazil with a suitcase full of other people’s money.
Simply because brokers share the professions’ ability to book flights and buy villas from the client account does not, alas, make insurance broking one of them. The basic ingredients of a profession must include: qualification before practice, study at a Russell Group University, an occupational function that develops its own intellectual property and a regime of self-regulation by fellow practitioners. And, most importantly, banks can’t do it too.
Nobody has ever suggested that the work of a solicitor or even an accountant constitutes a financial service. Why? Because, the accepted definition of a financial service includes the sale of a product with the unguaranteed potential to make you better off than you were before – such as a bond, a unit trust, or an annuity. Not like an insurance policy then.
The mission of general insurance is to put people back to where they were before an unforeseen calamity, not to make them richer. Similarly accountants and solicitors are focused upon keeping money safe from the taxman and/or property free of squatters. This is wealth protection, which is not considered a financial service in their world.
How is it brokers are regulated by the Financial Conduct Authority on the one hand and exhorted to embrace mandatory commission disclosure, with ‘professional fees’ as the alternative to commission, on the other? Yet broking is not a profession, nor a financial service. It makes no sense.
Of course, the problem is that banks sell insurance too, whereas they should be banished. It also doesn’t help that insurers are allowed to own brokers, which is a bit like a lawyer representing both prosecution and defence. Crazy.
So, onwards and upwards through 2014 in the march toward professionalism and chartered status, but, remember, there is a difference between being ‘a professional’ and being a ‘profession.’