UK: Do You Need to Apply for FSA Authorisation by 13 July 2004? A Surprising Range of Businesses Do.

Consumer insurance products have become a lucrative source of income for service providers and retailers with customers now able to purchase insurance from supermarkets, travel agents, motor dealers and other High Street retailers. This popularity has attracted the attention of Government, which is now seeking to regulate the activity and ensure customers are properly protected.

From 14 January 2005 the Financial Services Authority (FSA) will assume regulatory control over the sale of general insurance (what the FSA refers to as N(GI)). This means service providers and retailers whose insurance activities are a side-line to their main business, including anyone involved in promoting or selling insurance such as supermarkets, banks, travel agents, motor dealers, estate agents, and utility companies, will have to meet FSA standards if they wish to continue with these activities.

If a business arranges or advises on general insurance, for example vets, solicitors, doctors and accountants it will need to be authorised by the FSA or to have been specifically exempted from authorisation. So N(GI) affects companies and firms outside, as well as within, the mainstream insurance industry. Companies dealing in insurance, in any shape or form, must be fully compliant with the Insurance Conduct of Business and other rules by 14 January 2005. The practical deadline for applications to the FSA for authorisation is 13 July 2004 so there’s less than a month to seek regulatory approval.

Our experience

Pinsents is currently advising a wide variety of clients on many aspects of N(GI):

• who needs authorisation and for which activities?

• activities of overseas call centres

• the "by way of business" test

• exclusions including the exclusion for connected warranty contracts

• exemptions including the professional firms exemption

• drafting/amending contracts with parties who will need authorisation

• providing restructuring solutions

• to which contracts/customers do they apply?

• submissions to the FSA on behalf of retailers in respect of warranties

• tacit renewals

• distance contracts and the Distance Marketing Directive

• risk transfer – advice for submission to FSA by insurance brokers

Pinsents is one of the few national law firms that has a dedicated insurance team with experience of advising insurers, reinsurers, intermediaries, retailers and others on insurance regulation. Our team works closely with the firm's cross-discipline market groups, which bring together lawyers with specialist knowledge of sectors such as services and retail.

Andrew Long, Head of Insurance Regulation, is recommended as a leading expert in Financial Services (Chambers). He has been described as "an informed practitioner" with a "first-rate reputation" and "innovative", and "leads a large team which received unanimous praise from clients and practitioners alike".

Partner, Martin Membery, is "praised by clients for his business understanding and prompt advice" (Chambers) and "stands out as a hardworking and very intelligent lawyer" (Legal 500). The team "welcomed the significant arrival of Tim Burton" (Legal 500) as partner and Head of Group from a leading intermediary where he was General Counsel.