FSA To Review General Insurance Regulation

by Robin Pilgrim, LawAndTax-News.com, London

29 September 2005

The UK's Financial Services Authority (FSA) announced last Friday that it will be conducting a review of the effectiveness of its general insurance regulatory regime.

The review will begin in April 2006 and will focus on retail conduct of business requirements and on the effectiveness of the regime in meeting the intended outcomes for consumers set out in the consultation process leading up to the start of general insurance regulation in January 2005.

Clive Briault, FSA Managing Director of Retail Markets, told the Chartered Insurance Institute Annual Conference last week that:

“This review will be undertaken alongside the review of the effectiveness of the mortgage regime, which we have already announced and which will begin at the end of this year. This joined up approach will recognise the linkages between the mortgage and general insurance regimes, and the fact that many firms are active in both these markets. In addition, the review will take into account our determination to find ways in which we can improve the effectiveness of our regulation and can contribute to the better regulation agenda."

“If the review leads us to conclude that changes to our rules and guidance are necessary, we will, of course, consult on these in the usual way. However, we need to recognise that our ability to make changes is constrained by European Directive requirements – in particular, those in the Insurance Mediation Directive and the Distance Marketing Directive”.

"The review will be built on three core features:

• To encourage feedback from firms and other stakeholders on what they think is effective or ineffective in the regime. The FSA is keen for the industry and other stakeholders to come forward with views on the areas which they believe could benefit from re-examination;
• To undertake consumer research to see whether the intended benefits of the regime are beginning to come through - especially through consumers making good use of the information firms are now required to provide to them; and
• A continuation of the FSA’s thematic and firm-specific work to check that the industry is complying with the regime. The FSA will aim to feed back the initial findings of the review towards the end of 2006."

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