Final rule book aims to increase flexibility of CP187 proposals
The Financial Services Authority (FSA) has released the final details of its general insurance regulatory regime. It has now started to accept applications for the start of regulation on 14 January 2005. The final rules contain a number of changes aimed at clarifying and increasing the flexibility of proposals set out in Consultation Paper 187.
In the rules, disclosure requirements have been significantly reduced for introductions. This means intermediaries will only need to disclose their name, address, statutory status, whether they are part of a group they are making an introduction to and details of any fees the customer will have to pay for their services.
The FSA has also introduced some flexibility to the demands and needs statement. Insurers making a personal recommendation to a commercial customer do not need to provide a demands and needs statement as long as they obtain the customer's informed consent not to receive it.
Guidance for white-labelling has also been included. Firms should make clear to the customer the identities of both the insurer and the intermediary and should ensure that their communication with customers is clear, fair and not misleading.
Following the announcement of the rules, Sarah Wilson, director of high street firms at the FSA, said: "Insurers and intermediaries need to get cracking on their preparations for regulation. We encourage those businesses that wish to seek direct authorisation to take advantage of the discounts that we are offering for early applications."
She continued: "Insurers will also need to satisfy themselves that all the links in their supply chain affected by regulation become either authorised or an appointed representative. Insurers will not be able to continue doing business with unauthorised intermediaries."
The long awaited rules have been well received in the industry. Ron Wheatcroft, technical manager at Swiss Re Life & Health, said the document showed promise but warned advisers to start planning for the implementation of the regime.
"The insurance conduct of business sourcebook is a positive document. The Financial Services Authority has shown its willingness to listen to the industry and it is now up to intermediaries to act as soon as possible. The foundations have been laid and advisers should now decide what status they wish to have in 12 months time," he said.
