REGULATION OF GENERAL INSURANCE
The regulation of the marketing of general insurance continues to be suject to great
change.
With effect from 14 January 2005 the Financial Services Authority (FSA) www.fsa.gov.uk became responsible for the regulation of all general insurance intermediary activity – and any business wishing to sell, advise on or even introduce customers to sources of general insurance cover will almost certainly have had to become authorised by FSA to continue to do so.
This is not just a technical matter – many retailers, service providers and independent financial advisers and brokers rely on general insurance selling income and can earn the income and make an acceptable return provided the regulation of the activity is reasonably straightforward. Such businesses have never considered themselves as in need of detailed external regulatory control of the type exercised by FSA over banks, building societies, insurers and investment advisers – and their businesses have not been structured to operate in this manner. But this has now changed following regulation by FSA, and is now changing again.
Businesses are simply not allowed to carry on any general insurance activity unless they apply for, and FSA agrees to give, authorisation for that activity – indeed it is a criminal offence to carry on such business as an unauthorised entity unless exempt.
Authorisation is direct by FSA, or via an authorised firm making an insurance intermediary its appointed representative – the authorised firm taking full responsibility to FSA for all the acts and omissions of that representative.
The nature and implications of the regulatory regime which FSA operates are highly complex – businesses not only need to understand them thoroughly, but need to be in a position to take key strategic decisions as to how they comply with FSA's rules. The position has recently become more difficult as FSA is making a significant move away from the certainly provided by its rules-based regulatory regime towards a new “principles-based” regime.
In order to take these decisions in the light of a rapidly changing regulatory landscape a business needs the very best information and guidance – which is precisely what is available from the Insurance Regulation Department at Coffin Mew LLP.