Two points in the Chancellor’s summer budget would probably have come as a surprise to those involved in insurance business.
The increase in premium tax from 6% to 9.5% for polices written after 1 November 2015 will hardly have been welcomed. The Treasury expects this to raise half a billion pounds in the 2015/16 financial year and around one and a half billion pounds annually in future years. The lead-time was really quite limited, with 1 November less than four months after the Chancellor’s budget speech in early July. We might have expected an April 2016 implementation of this new tax rule, given that Government reforms tend to attach on either 6 April or 1 October of each year (these being known as “common commencement dates”). One very plausible explanation for the adoption of a 1 November for the higher IPT rate is that it will allow the Treasury to collect higher rate of IPT on the vast numbers of policies renewing on 1 January and on 1 April 2016.
The other measure, which will certainly be regarded more favourably, was the announcement of a fundamental review of the regulation of claims management companies (CMCs). Although the CMC sector has changed noticeably since the ban on referral fees was introduced in April 2013, there are clearly ongoing concerns as to operating practices in parts of it. The regulatory review may possibly be equipped to address these. Its terms of reference have just been published by the Treasury and the MoJ. That material, available here, emphasises that the review will move quickly and views are requested by Friday 13 November at the latest. Those with an interest are “strongly encouraged to submit their evidence before this date.”
The temptation to link the folklore surrounding the closing date with any potential impacts for the sector is probably one that is best resisted and left to tabloid headline writers. The MoJ and Treasury will be far more interested in evidence-based submissions and proposals for improving the regulation and performance of the sector in the interests of consumers.
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).