01 June 2004

Keeble Hawson

http://www.keeblehawson.co.uk

FSA to Regulate General Insurance

Businesses who are unprepared for the forthcoming revolution in the regulation of general insurance selling could risk losing their business. Stringent new regulations, which will affect a diverse range of small businesses, will come into force in January 2005. The new rules will require all firms acting as insurance intermediaries to be appropriately authorised by the FSA (the government's financial services watchdog). Any firm conducting a 'regulated activity' that does not secure authorisation before January 2005, may find themselves unable to carry on conducting that business.

The range of businesses that may be affected by the new rules is extensive and the process for securing regulation is complicated. The new insurance rules come on top of similar regulations affecting mortgage brokers.

A wide range of small businesses will be affected by the new rules. The extensive list includes insurance brokers and other insurance intermediaries, shops and retailers, motor dealers and car hire firms, travel agents, electrical appliance retailers, mobile phone sellers, home removal and freight forwarding companies and even employers and trade unions offering insurance to employees and members. Firms offering insurance related activities should ask themselves the following questions - do their activities involve;

• arranging the purchase of insurance policies

• advising on insurance policies

• dealing as an agent for an insurer

• assisting in the administration and performance of insurance contracts

If the answer to any of these key questions is 'yes' then the firm should seek advice and begin the process of applying for authorisation. To date over 15,000 firms across the country have applied. The new rules come into effect on 14 January 2005. This may sound a long way off but firms have to go through an application process which can take up to six months. The FSA has stated that it cannot guarantee firms processing applications prior to 14 January 2005 unless they are received by 14 July. A firm carrying on insurance selling without authorisation at 14 January 2005 may find itself committing a criminal offence.

There are important exclusions which may be available and which would mean that firms do not need to be regulated, in addition, a firm may avoid the need to be regulated itself by linking up with another, regulated firm, and becoming its 'appointed representative'. Deciphering which firms do need to be regulated and which firms don't is not a simple process.

Once authorised a firm will be subject to the extensive rules of the FSA such as complying with strict standards for management systems and controls, the training and competence of staff and minimum requirements for maintaining financial capital and protecting customers' money. This is by no means a simple set of regulations - some firms may find they need to seek specialist guidance on meeting these standards following authorisation. Firms should take authorisation and consequences seriously.

If you require further information or advice on any of the issues above,
please do not hesitate to contact Jim Gervasio or Lucy Miles on 0113 297
9570.
Email: jimgervasio@keeblehawson.co.uk or lucymiles@keeblehawson.co.uk

www.keeblehawson.co.uk

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£ Keeble Hawson. The content of these messages may not be reproduced without our permission

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Our EMU messages are provided for general interest and information only. While every effort is made to ensure that they provide an accurate statement of the law in England as at the date of their transmission, no liability is accepted for any loss or damage arising from any act or omission resulting from any message. The messages are not intended to constitute legal advice to any individual or organisation. If you believe that the content of any message is relevant to you, you are strongly urged to take specific legal advice as every case must be assessed on its own particular facts.

© Keeble Hawson. The content of these messages may not be reproduced without our permission.

Our EMU messages are provided for general interest and information only. While every effort is made to ensure that they provide an accurate statement of the law in England as at the date of their transmission, no liability is accepted for any loss or damage arising from any act or omission resulting from any message. The messages are not intended to constitute legal advice to any individual or organisation. If you believe that the content of any message is relevant to you, you are strongly urged to take specific legal advice as every case must be assessed on its own particular facts.

Keeble Hawson http://www.keeblehawson.co.uk/

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http://www.keeblehawson.co.uk

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