The extension of FSA regulation to general insurance mediation in January 2005 has brought many firms, large and small, into the regulatory net for the first time. We have helped many with their initial applications for authorisation, and we provide a range of ongoing support tailored to the very different needs of different types and sizes of intermediary. We have also carried out a number of larger-scale compliance reviews for insurance firms.
From January 2009 regulation is being extended to the sale of travel insurance alongside a holiday or other related travel. With our experience of helping firms for whom regulated business is a secondary activity, we are well placed to help travel firms review their options and to assist with an application for authorisation where necessary.
The FSA have made great efforts to simplify their communications with smaller insurance firms and to make their regulatory life as simple as possible. But with the best will in the world the FSA's material has to be fairly generic, and many firms still need help in identifying what is most important for them, and in dealing with the six-monthly RMAR returns to the FSA and other occasional FSA enquiries. Our basic support service, which combines a tailored newsletter/reminder service with a modest amount of consultancy support to be called upon as required, is designed to fulfil this "hand-holding" need, and many smaller insurance clients use it for just this purpose.
Client money has been – and remains – a particular focus for the FSA in the insurance mediation area. They have put out a lot of announcements and guidance material about this, and their supervisory approach in this area can be expected to become harder-edged. We have helped a number of firms with client money procedures and reviews of their arrangements.
Payment Protection Insurance is another continuing FSA priority, with a number of enforcement cases completed and others in the pipeline. The FSA have made it clear that they will continue their work in this area. Firms selling PPI – including secondary intermediaries for whom it represents only a very small part of their total business – need to ensure that their systems are robust and delivering the outcomes the FSA expect to see. We can help firms review their performance in this area and make improvements where necessary.
All firms that deal in any way with retail customers need to review how the principles of "Treating Customers Fairly" are reflected in their business: the FSA set a deadline of March 2007 for real progress to be made and their feedback on the extent to which firms had met that deadline showed that many still have some way to go. Further deadlines have now been set for 2008. We can help insurance firms tackle this in a way that is appropriate and proportionate to their business – see under TCF in our "Briefings" pages.
The Lloyd's market offers some interesting opportunities - not least for firms providing advisory services, both to members and to institutional investors looking to introduce corporate capital to Lloyd's. At times however providers of such services can face some quite tricky regulatory questions, in terms for example of the regulated activities being conducted, categorisation of the business in terms of FSA capital and reporting requirements, and so on. We can work with firms in this area to clarify the issues and develop an appropriate and proportionate approach to compliance requirements.
Outsourcing by insurance firms provides many opportunities for specialist service providers - for example claims handlers, run-off managers - many of whom find themselves on the fringes of regulation. Some will clearly be conducting regulated activities and so require FSA authorisation. Others will equally clearly not be conducting regulated activities. And for some of those in between it may be quite a fine judgement. We can help with the analysis such cases may require.
Even where the service provider does not require authorisation itself, it will need to be aware of FSA issues relevant to the business it is servicing. Client firms will need to be able to show that the business is properly conducted, organised and controlled, in order that their own compliance obligations to the FSA are not compromised, so will expect service providers to show appropriate compliance awareness. More generally, service providers need to keep up with FSA developments which may affect the services they offer - or indeed offer new opportunities. Our Bespoke service, with consultancy advice available either on an ad hoc basis or through our basic service arrangement, can be an excellent way for service providers to monitor developments relevant to them without having to search out the key points for themselves from within the FSA's extensive monthly output.