Financial Services and Markets Bill – Committee Stage 

Financial Services and Markets Bill – Committee Stage 

Executive summary 

BIBA welcomed the broad cross-party support at Second Reading for modernising financial services regulation. Peers rightly focused heavily on proportionality, regulatory accountability, consumer protection and parliamentary scrutiny.  

BIBA supports the Bill’s broad direction: it gives statutory form to reforms that should make regulation more proportionate, predictable and growth-oriented, while preserving appropriate consumer protection. 

For insurance brokers, the most important measures include faster authorisation timeframes, Financial Ombudsman Service reform, changes to the Senior Managers and Certification Regime, a new gateway for firms acting as principals for appointed representatives, and temporary Part 4A permissions for start-ups. 

At Committee Stage, BIBA asks Peers to press for two targeted improvements: 

1. Ensuring the regulators’ growth and competitiveness reporting is measurable, comparable, sector-specific where possible and useful for parliamentary scrutiny.

2. Extending claims management company (CMC) regulation to Northern Ireland, closing a long-standing gap in consumer protection and market oversight. 

About BIBA and why the Bill matters 

The British Insurance Brokers’ Association (BIBA) is the UK’s leading general insurance intermediary organisation, representing insurance brokers, intermediaries and their customers. 

BIBA represents around 1,800 regulated firms employing more than 100,000 people. General insurance brokers contribute £26.1 billion to the UK economy, arrange 77% of all general insurance and 94% of commercial insurance, with total estimated premium of £150 billion. BIBA also helps more than 430,000 people each year access insurance through its Find Insurance Service. 

Insurance brokers help households and businesses understand risk, access suitable protection and build resilience, including where customers have complex needs or difficult-to-place risks. Most brokers are SMEs operating in a heavily regulated market. Unclear, slow or duplicative regulation increases costs for firms and customers, reduces choice and slows innovation. 

BIBA is not seeking deregulation. It supports better regulation: clear responsibilities, timely decisions, consistent interpretation of rules, measurable reporting and accountability for regulatory performance. The Bill moves in that direction, and BIBA’s proposed improvements would make it more complete. 

BIBA’s view on the Bill 

Following Second Reading, BIBA continues to support the Bill and welcomes the Government’s decision to legislate in several areas that BIBA has previously called for. In particular, BIBA supports: 

• Faster authorisation decisions: Clause 21 reduces statutory timeframes for Part 4A applications, which should reduce unnecessary delay for new entrants and firms seeking to vary permissions, and increase competition in the interests of consumers. 

• Financial Ombudsman Service reform: Clauses 7 and 8 should improve predictability, consistency and alignment between FOS decisions and FCA rules, while preserving access to fair consumer redress. BIBA supports a route for referrals to the FCA on ambiguous rules or matters with wider market implications. 

• A more proportionate SM&CR framework: Clause 34 repeals the Certification Regime, while Schedule 3 allows some senior management functions to proceed by notification rather than pre-approval. 

• A principal permission for appointed representatives: Clause 24 requires authorised firms to have FCA permission before acting as a principal for appointed representatives. BIBA supports stronger scrutiny, provided implementation is proportionate for well-governed broker firms. 

• A temporary permission route for start-ups: Clause 29 creates temporary Part 4A permissions, which could support competition and innovation if eligibility criteria are practical for new insurance broking businesses. The opportunity for that period to run for two years as provided for in clause 29(3) better aligns with the functioning of the general insurance market’s annual renewal cycle. 

• Permanent reporting on growth and competitiveness: Clause 20 creates an ongoing standalone annual report to the Treasury on how the FCA and PRA have advanced their secondary competitiveness and growth objectives. BIBA believes this reporting should be strengthened so that it is measurable, comparable and relevant to firms’ practical experience. 

BIBA’s key asks 

BIBA is asking parliamentarians to use Committee Stage to strengthen the Bill in two targeted areas. 

1. Ensure growth and competitiveness reporting is measurable, transparent and useful in practice

BIBA welcomes Clause 20, which creates an ongoing requirement for the FCA and PRA to report annually to the Treasury on how they have complied with their duty to advance the competitiveness and growth objective. This builds on the reporting requirement introduced by the Financial Services and Markets Act 2023, an area on which BIBA closely engaged with parliamentarians. 

The Second Reading debate on Clauses 16 to 18 showed a clear cross-party interest in ensuring that regulator accountability is practical, measurable and useful for parliamentary scrutiny. Clause 20 is the best route to ensure Parliament can test whether the secondary competitiveness and growth objective is being delivered in practice. 

The FCA has begun publishing dedicated metrics on the secondary international competitiveness and growth objective, including authorisations, operational efficiency, policy impact, data collection and innovation. These are important, but Parliament should use the Bill to ensure annual reporting is clear, comparable and relevant to the practical experience of regulated firms, including insurance brokers. 

BIBA notes and supports Baroness Noakes’ amendment requiring the Treasury to lay the FCA and PRA’s competitiveness and growth reports before Parliament. BIBA also welcomes the principle behind amendments tabled on authorisation metrics, Cost Benefit Panels and net regulatory burden. Together, these amendments underline the need for reporting that goes beyond high-level narrative and allows Parliament to assess regulator performance in practice. 

For insurance brokers, many of which are SMEs, regulation is experienced cumulatively, not rule-by-rule. The combined effect of new rules, guidance, reporting requirements, supervisory activity, data requests and regulatory delays can be more significant than any single regulatory change. Clause 20 reporting should therefore include practical evidence of whether regulatory burdens are being assessed cumulatively, whether new requirements are proportionate, and whether smaller firms and lower-risk business models are seeing genuine improvements. 

BIBA therefore asks parliamentarians to seek assurances that the Clause 20 reports will include: 

• authorisation and variation of permission timelines, including average determination times and outcomes; 

• use of “stop-the-clock” mechanisms, including the number of cases, average duration and reasons for pausing or extending statutory determination periods; 

• sector-level information where possible, including for insurance distribution and broking; 

• the cumulative cost and operational impact of new rules, guidance, supervisory initiatives and data requests; 

• year-on-year comparability using consistent metrics, with explanations for any material change in methodology; and 

• evidence of how proportionality is being applied for small and medium-sized firms and lower-risk business models. 

BIBA suggests the following draft amendment to Clause 20: 

Clause 20, page 25, line 7, at end insert – 

“(3A) A report prepared by a regulator under this section must be prepared and published in a manner which is clear, comparable with previous reports so far as reasonably practicable, and relevant to the practical experience of authorised persons and consumers. 

(3B) A report under this section must include, so far as reasonably practicable – 

(a) information on the regulator’s performance in determining applications for permission under Part 4A of the Financial Services and Markets Act 2000 and applications for variation of permission, including average determination times and the use and duration of any process by which a statutory determination period is paused or extended; 

(b) sector-level information, where it can be provided without disproportionate burden; 

(c) an assessment of the cumulative cost and operational impact of new rules, guidance, supervisory initiatives and data requests made or issued by the regulator during the reporting period; 

(d) an explanation of how the regulator has applied proportionality, including in relation to small and medium-sized authorised firms; and 

(e) year-on-year comparisons against metrics used in previous reports, or an explanation of any material change in methodology.” 

This would ensure the secondary competitiveness and growth objective is subject to meaningful scrutiny and allow Parliament to assess whether the Bill is delivering measurable improvements for well-run firms and their customers. 

2. Close the gap in claims management company regulation in Northern Ireland

BIBA is concerned that the Bill does not address the absence of FCA regulation of claims management companies (CMCs) in Northern Ireland. CMC regulation in Great Britain sits within the FCA regulatory perimeter, but Northern Ireland currently remains outside that framework. This can no longer be seen as a technical anomaly; it is a material consumer protection and market integrity gap. 

Although the Northern Ireland gap was not raised directly at Second Reading, Peers raised related concerns about claims management company behaviour, FOS caseloads, fraud, mis-selling and consumer protection. Amendments tabled in Committee also show a wider focus on fraud prevention, redress, FOS/FCA alignment and the protection of consumers and SMEs. However, no amendment currently addresses the specific gap in CMC regulation in Northern Ireland. Extending FCA regulation of CMCs to Northern Ireland would be a targeted response to those concerns and would ensure consumers in Northern Ireland are not left with weaker protection than consumers in Great Britain. 

The case for action is urgent. Average motor claims costs in Northern Ireland have tracked more than 30% higher than in England and Wales since 2021, with the average claim in 2024 costing £6,588 in Northern Ireland compared with £4,782 in England and Wales. CMCs can add between 15% and 30% to a total claim by taking a percentage cut of compensation that does not reach the claimant.1 

The FCA has recently launched a market-wide review of claims management practices following concerns about aggressive marketing, misleading advertising, unfair exit fees, consumers being signed up without proper consent, and multiple representatives acting for the same consumer. It has already removed or amended 800 misleading adverts and enabled more than 28,000 consumers to exit contracts free of charge.2 

Northern Ireland should not remain outside the FCA perimeter at the point when these risks are becoming more visible. The gap leaves consumers with weaker protection than elsewhere in the UK and leaves insurers and brokers exposed to avoidable claims costs, which ultimately put pressure on premiums. 

BIBA believes there is a strong case for the Government to bring forward, or support, an amendment extending the territorial scope of FCA claims management regulation to Northern Ireland. This would be a practical, targeted correction consistent with the Bill’s wider focus on consumer protection, redress and better regulation. 

BIBA suggests the following draft new clause after Clause 12: 

After Clause 12, insert the following new Clause –  

“Claims management services: Northern Ireland 

(1) The Treasury may by regulations make provision for claims management services provided in, from or into Northern Ireland to be regulated under the Financial Services and Markets Act 2000 on a basis equivalent to claims management services provided in, from or into Great Britain. 

(2) Regulations under this section may amend primary legislation, retained direct principal EU legislation or subordinate legislation, including – 

(a) the Financial Services and Markets Act 2000; 

(b) the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and 

(c) Part 2 of the Financial Guidance and Claims Act 2018. 

(3) Regulations under this section may make consequential, supplementary, incidental, transitional, transitory or saving provision. 

(4) Before making regulations under this section, the Treasury must consult – 

(a) the Financial Conduct Authority; 

(b) the scheme operator of the ombudsman scheme under Part 16 of the Financial Services and Markets Act 2000; 

(c) the Department of Finance in Northern Ireland; and 

(d) such other persons as the Treasury considers appropriate. 

(5) Regulations under this section are subject to the affirmative procedure. 

(6) In this section, “claims management services” has the meaning given by section 419A of the Financial Services and Markets Act 2000.” 

BIBA is not asking Parliament to impose an immediate regulatory regime without consultation. The proposed amendment would give the Treasury a targeted power, subject to consultation and affirmative parliamentary approval, to extend FCA regulation of claims management services to Northern Ireland. This would allow the Government to work through the detailed territorial, operational and transitional issues while creating a clear legislative route to close the current gap. 

Conclusion 

BIBA supports the Financial Services and Markets Bill. It gives legislative effect to reforms that should help create a more proportionate, predictable and growth-oriented regulatory environment. BIBA asks parliamentarians to use Committee Stage to press for two targeted improvements: strengthening the Clause 20 reporting framework so that regulator growth and competitiveness reporting is measurable and practically useful; and closing the Northern Ireland CMC regulation gap. 

Please contact the [email protected] for further information or evidence on the issues raised in this briefing.