UK: Corporate Insurance Regulatory Update

FSA Policy Documents CP 10/05: Regulatory Fees and Levies – Rates Proposals 2010/11 and Feedback Statement on Part 1 of CP 09/26

12 February 2010

In October or November the FSA conducts an annual consultation on proposed changes to the underlying policy for FSA fees charged to authorised persons and on levies due to the Financial Ombudsman Service and Financial Services Compensation Scheme.

In November 2009 the FSA published CP 09/26: Regulatory fees and levies: policy proposals for 2010/11 in which the FSA conducted its annual consultation on proposed policy changes to the fee and levy regimes.

The FSA has now published Consultation Paper 10/05: Regulatory fees and levies — Rates proposals 2010/11 and feedback statement on Part 1 of CP09/26 which sets out:

  • Feedback on the strategic review proposals in CP09/26; and
  • Consultation proposals on the fee and levy rates that it intends to raise for itself, the FSCS and the FOS in 2010/11.

The deadline for comments on the proposals ranges from March 11, 2010 to April 12, 2010. Consultation Paper 10/05 specifies which deadlines apply to which proposals.

A copy of the Consultation Paper can be found at:


Market-Wide Exercise Report

9 February 2010

The Tripartite Authorities (the FSA, Bank of England and the Treasury) have published the latest market-wide exercise (MWE) report based on a severe weather scenario.

In November 2009 the Tripartite Authorities carried out the fifth in a series of MWE designed to assess and improve the UK financial sector's ability to deal with major operational disruption.

The key objectives of the exercise were to:

  • Focus on the potential outcomes of severe weather;
  • Pursue key issues arising from benchmarking and the 2006 MWE as well as the return to business as usual; and
  • Explore the relationship between the Tripartite Authorities and the sector during a major operational disruption.

Next steps:

  • The Tripartite Authorities will review their strategy for engaging with the sector during such incidents, including use of the FSC web site;
  • The role of the Tripartite Incident Response Framework will be clarified;
  • The Association of British Insurers is considering introducing market wide agreements between general insurers with regard to automatic extension of cover;
  • The Building Societies Association is considering forming a specialist Business Continuity Contingency Panel to share experience and best practice across their members, and to seek business continuity advice; and

A copy of the MWE Report can be found at:

IMAP Update

15 February 2010

The FSA intends to publish regular updates on its website regarding activity on the Solvency II internal model approval process. The FSA has published its second IMAP update which provides information on key developments as the FSA begins the 'pre-application' phase of the IMAP.

The February update can be viewed at:

Peter Smith Speech

24 February 2010

The FSA has published a speech by Peter Smith (head of investments policy, conduct policy division, FSA) on FSA Concerns about Traded Life Policy Investments (TLPIs).

The FSA uses TLPIs as a collective term for any products that invest in traded life policies, senior life settlements or viatical settlements.

Smith discusses the FSA's position on the inherent risks of TLPIs, focussing on:

  • Longevity risk;
  • Volatility of returns;
  • Liquidity risk;
  • Counterparty risk; and
  • Potential for loss.

These risks need to be taken into account in product design. TLPI providers are responsible for ensuring appropriate risk mitigation strategies are in place at the early stages of design.

Provider firms must have systems and controls to ensure that their products are well designed. Smith also discusses:

  • Misleading financial promotions;
  • Unsuitable sales by intermediaries; and
  • Treating customers fairly.

A copy of the speech can be found at:

Dear CEO Letter on Adequate Financial Resources for Insurance Intermediaries

25 February 2010

The FSA has published a "Dear CEO" letter on adequate financial resources for insurance intermediaries.

The FSA's supervisory work with insurance intermediaries regularly shows that they are not paying sufficient attention to threats to the financial viability of their firms. Consequently the firms are not taking steps to guard against such threats or to develop management plans for the materialisation of those threats. This failure to consider financial resources properly has led to a number of firms underestimating future demands on them.

A copy of the letter can be found at:

Office of Fair Trading Office of Fair Trading Market Study into Consumer Contracts

4 February 2010

The OFT has launched a market study to examine when, how and why contracts may cause difficulties for consumers.

The OFT intends to look at how well consumers understand typical contracts and how this varies when contracts are, for example, presented online, over the phone, or during a face-to-face sales pitch.

The OFT will also look at how firms approach consumer contracts, and any practices which deliberately or unintentionally disadvantage consumers.

The deadline for comment is March 31, 2010.

Financial Ombudsman Service

Financial Ombudsman Service Complaints

Data 25 February 2010

The FOS has released its second six-monthly set of complaints data relating to individual financial businesses, including insurance companies. During this period the FOS received 82,136 new complaints, an increase of 18 per cent on the 69,841 cases received in the first half of 2009. Of these new cases, 88 per cent related to 155 financial businesses.

HM Treasury

HM Treasury

25 February 2010

HM Treasury has published The Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2010. This order amends:

  • The Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 to create a new category of specified investment known as an alternative investment bond.
  • The Financial Services and Markets Act (Collective Investment Schemes) Order 2001 to exempt AFIBs from the scope of the collective investment scheme regime.

The order came into force on February 24, 2010.

An explanatory memorandum to the order has also been published which can be found at:


CEIOPS Roadmap and Report on Convergence

17 February 2010

CEIOPS has published its Roadmap on Convergence 2010 which outlines CEIOPS work for 2010 on the promotion of supervisory convergence amongst member states.

CEIOPS has also published a Report on Convergence 2009 which discusses its work on supervisory convergence between January 2009 and January 2010.

A copy of the Roadmap on Convergence 2010 can be found at:

A copy of the Report on Convergence 2009 can be found at:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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