FSA Clamps Down On Illegal Insurance Brokers

by Robin Pilgrim, LawAndTax-News.com, London

11 July 2005

The UK's Financial Services Authority announced on Thursday that it has begun a crackdown on firms which may be breaking the law by conducting unauthorised general insurance business; the regulator began overseeing the sector in January.

The FSA's 'perimeter team' includes both supervisory and enforcement staff, and its programme of visits across the UK is well underway.

The firms being contacted have been selected on the basis of a number of information sources, including the FSA's database of firms that registered or applied for authorisation but later withdrew. The FSA revealed that it is also responding to leads received from the industry and the public.

Clive Briault, FSA Managing Director of Retail Markets, explained that:

"Tracking down firms operating outside our regime is a major priority for the FSA. This is vital to protecting consumers since they do not have access to statutory redress and compensation if they deal with unauthorised firms. At the same time we urge consumers to check the status of the firm they are dealing with before conducting business with them. Details of authorised firms can be found on our web site."

"By cleaning up the industry we are levelling the playing field for legitimate authorised firms. Firms that are conducting general insurance business illegally should act now and either become authorised or stop carrying out that side of their business."

The FSA has stated that it will not put firms out of business unnecessarily, and that where breaches are inadvertent, or result from genuine misunderstanding, options for the firm will include obtaining proper authorisation.

However, in order to protect consumers, the FSA can choose not to authorise firms that have wilfully breached parts of the Financial Services and Markets Act and can take criminal proceedings if necessary.

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