In a scenario that will be familiar to mortgage brokers, despite protests from trade bodies the TSC recommended FSA regulation.
Its report stated: “There is significant evidence of consumer detriment in the travel insurance market. Around 10 million holiday makers in 2006 would not have been covered for medical expenses in the event of a terrorist attack. We see merit in the introduction of statutory regulation and believe the FSA is best placed to deliver such a system.”
Standalone travel insurance is already regulated so the TSC believes this would create a level playing field. While I don’t know enough about the workings of the industry to say whether the TSC is correct in deciding consumers are losing out, it seems travel agents will soon be forced to go through the same process as mortgage brokers.
When I spoke to a travel industry trade body representative recently, he had the same concerns as those involved in mortgages when it was announced that the FSA was to regulate advice – practitioners will leave the market to avoid being bogged down by the bureaucracy of regulation. This will mean fewer agents selling insurance so consumers will take out less, leaving them unprotected.
The fear that thousands of mortgage brokers would leave the market has not become a reality. While some did, many of these were due to retire anyway. Most of the cowboys have been driven out and we have a respected trade body in the Association of Mortgage Intermediaries.
But the worrying question is – who is going to meet the cost of the FSA taking thousands of travel agents under its umbrella?
Unsurprisingly, consumer bodies such as Which? are in favour of the statutory regulation of travel agents.
Mike Naylor, principal researcher at Which?, says: “Our research shows travel insurance is being mis-sold and consumers aren’t being given the appropriate information. There is no reason why travel agents should be excluded from regulation.”
While it’s early days, I’ll be tracking progress to see how much this resembles the path towards mortgage regulation.