Impending FSA regulation is the primary – and increasingly ominous – worry among brokers, according to the latest Norwich Union research.
The company’s bi-annual barometer of the broker market shows that nearly a fifth (17%) see FSA regulation as their biggest challenge, an increase in 7% since the end of last year.
In particular, the group of predominantly family-run brokers, which are currently the market’s most pessimistic – categorised in the research as “Fading Families” – are less prepared and in need of greater support for regulation. A similar picture emerges for the smaller, independent brokers – termed as “Corner Shops” – who focus on the personal touch. More than a quarter of brokers in each group (26% and 28% respectively) feel threatened by the new industry standards.
Only 56% of the “Fading Families” group have prepared for the FSA, compared to 70% among the so-called “Techno Savvy” brokers – pro-technology brokers who don’t see regulation as having a major impact on their business.
Despite this, almost two-thirds of broker businesses are planning to expand in the next 12 months. At the same time, there is evidence that a large number will retire as soon as they are financially able.
Other aspects of the research show that technology is viewed as a mixed blessing, benefiting some brokers while leaving others behind. Most intermediaries see E-broking as an opportunity but in need of greater tailoring, especially for commercial lines business.
After regulation, 15% of brokers cite competition as the major challenge, though the number feeling the pressure has dropped 7% compared to last year.
Norwich Union’s intermediary business director, Ken Wallace, said, “While regulation is clearly a worry for some sections of the broker community, the overall impression from our research is positive, with almost 85% saying they are optimistic about the future.”