Questions and Answers

Q. Who are the ‘FSA’?

A. The FSA is the organisation that regulates the financial services industry in the UK. One of the FSA’s main aims is to help the public get a fair deal when it comes to financial products, hence they have rules that those involved with financial products must comply with.

Q. I’ve heard that suddenly lots of businesses could potentially be affected by some of the FSA’s rules; what types of business could be affected?

A. Technically speaking, all businesses that are involved in ‘regulated insurance mediation activities’ (‘insurance business’) are affected. This is a wide definition and the simplest way to explain is by example. The table below highlights some of the businesses affected through certain insurance related products that they offer.

As you can see, this covers far more than just traditional insurance brokers.

Type of business	Example insurance related products on offer
Garage	Car insurance and extended warranties
Vets	Pet insurance
Private dentists	Dental health care insurance
Freight forwarders	Insurance of items in transit
Double glazing companies	Sale of extended warranties over five years or costing more than £500 p.a
Vehicle hire companies	Insurance against accident or damage
Accountants	Tax enquiry protection insurance

Q. It’s possible that part of my business might be caught. Exactly what types of insurance business activities are regulated?

Arranging the purchase of insurance policies. This includes such activities as introducing a customer to an insurer or insurance broker or helping a customer fill in an application form for insurance, then sending the form to the insurer or insurance broker.
Advising on insurance policies. This includes recommending a specific insurance policy to a customer.
Dealing as agent. This includes entering into a contract of insurance with a customer on behalf of the insurer, for example, issuing a cover note.
Assisting in the administration and performance of insurance policies. This includes notifying an insurance claim to the insurance company and negotiating a settlement on behalf of the customer. However, handling claims on behalf of the insurer and not the customer is not a regulated activity and neither is simply providing information to a claimant or insurer in connection with the assessment of a claim, as for example, a garage might do when assessing the cost of rectifying damage to a car.

Q. Is any ‘insurance business’ allowed without regulation?

A. Yes. There are certain exceptions for retailers, the most common example being extended warranties provided by electrical retailers and also for travel agents. If you think these may be relevant to you, we would be pleased to discuss the exemption conditions in more detail with you.