The Chancellor used this phrase in introducing the part of his budget speech that covers insurance. The budget materials point to close liaison between Treasury and the Ministry of Justice, in that they:
- announce a fundamental review of the regulation of claims management companies, reporting to both Treasury & MoJ, and
- reconfirm that the Insurance Fraud Task Force will report to both these departments by the end of the year.
The less welcome news for insurance customers is a 50+% increase in IPT (Insurance Premium Tax). In November, the rate will go up from 6% to 9.5% of premium charged.
George Osborne’s summer budget includes a short section on measures affecting the insurance industry. Inevitably, perhaps, these follow the theme of securing a better deal for consumers (the description “hard-working” is probably implicit in this last word). The relevant proposals set out by the Chancellor are important and potentially far-reaching.
A fundamental review of the regulation of claims management companies (CMCs) was announced. It is to be led by Carol Brady and will be done at some pace. A report to MoJ and Treasury is due to be delivered in around six months, in early 2016. Ms Brady is well-placed to lead this: she currently chairs the board of the Chartered Trading Standards Institute and is a non-executive member of the MoJ’s Claims Management Regulation Unit. She has also worked as lead ombudsman for the Office of Legal Complaints.
The announcement of this review follows only days after Harriett Baldwin, Economic Secretary to the Treasury, told The Sunday Times that: “We are determined to clamp down on sharp practice and protect consumers from abuse.”
The budget speech also refers to capping the charges CMCs can charge customers and makes particular reference to cases which fall within the remit of the Financial Ombudsman Service: in other words, complaints about PPI mis-selling.
On a separate point, although in a similar vein, material published with the budget (but not quoted in the Chancellor’s speech) reconfirms that The Insurance Fraud Taskforce will report by the end of this year on measures to reduce the impact of fraud on insurance premiums. As with the review of CMC regulation (above), the Taskforce will report jointly to Treasury and MoJ.
The measures above are likely to be widely welcomed in the insurance sector. The hike in insurance premium tax, from 6% to 9.5% will not be so warmly received by the industry and by its customers. According to the Treasury’s figures, the increase will result in the industry collecting an additional half a billion pounds in revenue for the Government in 2015/16, and around one and a half billion pounds annually thereafter.
The positive measures on CMC regulation, capping CMC fees and on the Fraud Taskforce do suggest that Treasury and MoJ are very much ‘joined up’ and working closely together.
The two departments may even share the same approach to grammar and language. According to The Guardian of 21 June, Justice Secretary Michael Gove “issued his civil servants with detailed orders on using good grammar … the instructions tell officials to write ‘make sure’ instead of ‘ensure’”. It would appear that the Chancellor also followed these instructions, given that he talked of action “to make sure that customers get a better deal”.
About the Author
Alistair Kinley is BLM’s Director of Policy & Government Affairs.
Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.
He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).