FSA Regulation Of UK Insurers Receives Mixed Welcome

by Robin Pilgrim, LawAndTax-News.com, London

18 January 2005

The assumption on Friday by the UK Financial Services Authority (FSA) of regulatory responsibility for general insurance sales, advice, administration and arranging has received a mixed response from the sector.

According to reports in the UK media this week, many insurance firms fear that the new guidelines on advertising and selling policies imposed by the FSA will increase red tape for firms, a development likely to lead eventually to higher costs for consumers.

However, the official line, as espoused by the British Insurance Brokers' Association (BIBA) is somewhat more positive. Speaking last week, BIBA's chief executive, Eric Galbraith explained that:

“BIBA has been actively involved in the lengthy consultation process undertaken by the FSA in formulating the rules that will apply in respect of broking activities. The FSA has taken a pragmatic approach and over all we are satisfied that the new regime will both protect consumers and be manageable for our members.”

In a statement published last week, the financial services regulator revealed that details of firms regulated to conduct general insurance business - either directly authorised or as appointed representatives of authorised firms - were placed on the FSA Register on Friday.

As of that date, the total number of directly authorised firms able to conduct general insurance business was 18,130 – 13,291 new authorisations and 4,839 variations of permission. In addition, authorised firms with a general insurance permission had a total of about 22,000 appointed representatives. Applications from a further 941 firms are still being processed.

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