Firms can stay outside GISC following ruling

Law firms which sell or advise clients on insurance products will not be obliged to join the General Insurance Standards Council (GISC) at present, following a ruling that the independent regulator is a restrictive practice.

The decision by the competition commission appeal tribunal (CCAT) gives the Law Society, which has applied to have solicitors exempted from GISC's regulation, further time to argue its case.

The GISC covers the regulation of 'all general insurance activities'.

The Society says the powers of the GISC would extend to the large number of law firms that deal with insurance - such as after-the-event products - as part of their legal services and thus lead to expensive double regulation.Alison Crawley, the Law Society's head of professional ethics, said: 'The decision gives us the opportunity to make our case more strongly for an exemption or a compromise for solicitors.

We applaud aspects of the GISC, but fear there is some unnecessary regulation that is not adding to consumer protection.'The rule struck down by the CCAT would have prevented GISC members from dealing with non-GISC members.

Almost all major insurers have joined the GISC.Membership of the GISC costs 0.1% of commission earned from the sale of insurance products or a minimum fee of 200.

Ms Crawley said that 'if this is applied to legal work, it could amount to a significant amount of money for some larger firms'.

Denise Kitchener, chief executive of the Association of Personal Injury Lawyers, said: 'The decision is good news.

It means that our members can still deal with insurers in the GISC without being forced into becoming members themselves.'GISC chief executive Chris Woodburn said he was 'disappointed' and would 'give careful consideration to the CCAT decision, particularly in the context of how effective regulation is to be achieved across the industry'.

A GISC response is expected within the next month.Andrew Towler